i just found the most ridiculous explanation from a Dev as to why the cities are spread out:
The original design had cities right up against each other. You can even see this in the original concept trailer which focuses on two boxes right across a river from each other building a great works power plant together. There were three major problems that led to cutting that feature:
Polygon count and rendering performance in general. The building shader is putting your GPU through a lot of work, and putting 5x as many polygons through (your city + 4 neighboring cities, and this is really a conservative estimate) just was too expensive. We could have made sacrifices to level-of-detail, etc., and possibly gotten it to work, but it would definitely have led to lower quality buildings in all cities including the box you are playing in. That said, if it wasn't for (2), we might have gone for it.
The local simulation stops at the edge of your box. Everything outside your box is part of the region, simulated on the server (for this discussion, the region highway you see coming in is actually part of your box, but in general nothing else is). It looked odd to have cars vanishing into the neighboring city, and you expected when your tourists commuted to the neighboring city that you could see where they went, but your city doesn't really know about the neighboring city.
This is also part of (2). The 'asynchronous multiplayer' part of region play doesn't make sense when the boxes are right next to each other. You'd expect that if my industrial district is right up against yours, and mine gets lit on fire, that the fire would flow across the box boundary. But that doesn't even work if the other player is offline--their city is not progressing while they aren't playing.
Overall I think the look of boxes next to each other was really cool, and I agree that it's not perfect to have the empty spaces between dense urban areas. But it was the right trade-off for the game. The region view does a good job tricking your eye into thinking the other cities are real, but that's due to MaxisJawad's impressive work on city impostors--they are only sort-of-kind-of real.
uh well ALL of that would be fixed if you gave us a single player offline option.
and the reason the city tiles will be 2x2 instead of 4x4:
Among other things, yes. We're targeting 32-bit operating systems which means we have 2-3GB of addressable RAM at the top end. Beyond the memory constraints, the terrain/physics system was designed for the size we have, and would probably need some pretty serious sections rewritten and debugged.
WHO IN THE frick IS USING A 32BIT SYSTEM THESE DAYS?