Taking the counties as the carrier to promote urbanization is not only an inevitable choice driven by the two major strategies of new urbanization and rural revitalization, but also a major decision to stimulate the vitality of economic development in the macroenvironment of internal and external circulation. Based on the three-dimensional analysis framework of “driving force-state-response”, the evaluation indicator system for the urbanization development level of counties in China was constructed. The multi-factor comprehensive weighting method, spatial autocorrelation analysis, multi-distance spatial clustering analysis, and spatial econometric model were used to reveal the urbanization development level, spatial distribution characteristics, and influencing factors of China’s counties from the perspective of time and space. The results showed that the urbanization development level of counties in China presented the evolutionary characteristics of fluctuating rise, and the state subsystem was superior to the driving force subsystem and the response subsystem. There were obvious differences in spatial distribution, and there was a significant positive spatial correlation. The financial support and investment in agricultural machinery had played a positive role in promoting the urbanization development level of counties in China. After further decomposing the spatial spillover effect, it was found that the investment in agricultural machinery and the ratio of per capita disposable income of urban and rural residents had a positive impact on the urbanization development of counties in neighboring areas, while the topography had a negative impact. The main policy implications of this study are that the stage differences in development in different regions should be fully considered, and the quality of the urbanization development in counties should be improved by enhancing the coordination of systematic development, deepening regional cooperation, and improving complementary support.