Clue: French town's housing monarch and heads of state assembled here? (10)
Answer: VERSAILLES
Explanation: Definition: French town's housing monarch and heads of state assembled here?
&lit – the palace of Louis XIV, and where the Treaty of Versailles was signed. VILLE'S="French town's", around/"housing": E[lizabeth] R[egina]="monarch" and the heads of S[tate] A[ssembled]