Why is such big density of churches in medieval towns?

By counting the different religious orders that one could expect to find in a town such as Cracow one would already arrive at a fairly large number to boot: I would assume that Capucines, Franciscans, Dominicans, Jesuits, perhaps Cistercians and several others maintained presences at central sites because of their relations to court, to the local university, to hospitals, etc. It's a frequent pattern that can be observed in many (former) residential mid-size and large towns throughout Europe.

Well, you need to understand the value and significance that religion had on the Medieval European mindset.

Churches, in the Middle Ages, varied in size, ranging anywhere from chapels, to Cathedrals; however, most centers of Christian worship were moderately sized Churches.

The presence of the Church, to the Medieval Christian, was not the way we, in the contemporary world MAY view it-(that is to say, an archaic institution which conducts age old rituals and services amidst a ubiquitous presence of secularism and humanism). For the Medieval Christian, the presence of the Church, was the actual and existing median point between Earth and Heaven. When stepping into a Church during the Middle Ages, the average European Christian was probably smitten and dazzled by the impressive architectural design surrounding him or her. The Medieval Parish Priest was not merely a Town Preacher, but rather, the Central and perceptible Figurehead whose primary role was to reenact the life and times-(and spiritual identity) of Christ through the Eucharist.

Therefore, if the Christian religion, was at the Center of Medieval European society's collective-(as well as personal) identity, then the actual spacing of such a widespread identity manifested itself with the construction of several Churches-(in various shapes and sizes) in close proximity whereby townsfolk could walk to on a routine basis. The closer you were to various Churches, the more you were connected with the spiritual-(or so it was commonly believed).

If, for example, one looks at The Via Dolorosa in Jerusalem, the Famed Walkway is not just Home to the Church of the Holy Sepulcher, but, there are numerous chapels and churches along the pathway which are primarily administered by the Roman Catholic Church, the Greek Orthodox Church-(as well as other Eastern rite Churches). The numerous Chapels and Churches represent "The Stations of The Cross", culminating in the Center of The Church of the Holy Sepulcher. The most sacred walkway or pilgrimage within Christendom, can, in a way, serve as a model for better explaining the physical and peripatetic connection, as well as the perceptible identification the Christian pilgrim had-(and still has) with the historicity of Christ.

The numerous Chapels, Churches and even Cathedrals condensed into various Medieval European towns and hamlets, are not the equivalent of the Via Dolorosa, though, like the Via Dolorosa, they were designed for the Christian worshiper to have a physical and peripatetic connection, as well as a perceptible identification with the sacred; to actually be in close proximity towards the physical and spiritual Christian landscape.

Much of this may seem anachronistic, estranging and incomprehensible, though we must remember that we are discussing an age 1000 years prior to our own time, whereby a more religious and ultra-pious mindset was widespread among town populations throughout much of the European continent.

While 19 churches and chapels in a compact downtown core may seem like a lot in todays world, it is not so many in historical terms. A church that holds more than 1000 people is a large church, and a cathedral that holds more than 1500 people is a large cathedral (St. Paul's seats 3,500 and Westminster Abbey 2,000).

In a society where everyone not attending (a Christian) church at least once a week is suspect of being a closet Jew or Muslim, or worse, and in which the connections made at one's church are essential for business, trade, politics and social advancement, every community needs enough buildings and services to house its citizenry on a weekly basis. Even assuming an average capacity of 1,500 with three Sunday services, 19 churches still only serve 85,500 people.

Given that the plague of the 1590's left 20,000 of Cracow's population dead, one can easily imagine that the total population served by those 19 churches at the time approached 100,000.

Update:
There is also an economic element to providing a variety of flavours of religious service even within a nearly mono-religious culture. As today, there are those who enjoy a slow-paced midmorning mass complete with choral accompaniment, and those who prefer a quick early-morning mass with minimal sermon and no hymns. Those who prefer the full pageantry of a service performed for, if not by, the resident Bishop, and those who prefer a smaller service with well-known friends and colleagues instead of all the riff-raff of the city. A multitude of buildings and service times enable the clergy of a large city to cater an equal number of tastes and preferences.

Further it, is important to remember that those big Medieval cathedrals could take 100 years or more to build. In the meantime, it was still necessary to provide religious services to the nearby parishioners, rain or shine, winter or summer, is some sort of structure protected from the elements.

As to why all those churches are centrally located within the downtown core of the city, that's easily explained - because the downtown core of the city was the walled portion of the city.

On our trip to Barcelona, we do found it extraordinary that in parts of the old city that churches would be such close proximity to one another. As it was explained to us, the various churches reflected a wide range of cultural, social economic and trade guild distinctions. Their was a simply plain church for mariners and another more elaborate for artisans. Near by churches with even more elaborate flair represented a comforting setting for the commercial elites. There was much that separated and segregated population groups within communities. in that way things have not changed over the millennium.