This game like AOE is based on civilizations competing for resources in a limited play area. Civilization comes from latin Civitas, which translates into "City" in english, "ciudad"" in spanish, cité" in french, "città " in italian. "cidade" in portugues, etc.. and means group o people who have suceded to settle in cities (bigger or smaller) instead of wandering around to find food and water, and from that perspective city building plays a essential role as all is about it.
From my point of view, the focus of the game is on the cities. A bunch of cities with it's own culture is a civilization. The city provides protection, food, knowledge, etc..
That's why you protect your city and need walls and large armies. If your cities fall your civ. may perish.
Therefore, to build your city larger, nicer and with lot's of different buildings gives and Idea of the rise of your civ. Most old civ. tied to their capital city, (Rome, Athens,Carthage, etc...
City building is a