I noticed that AI will never ever build city on empty patch of land that has no resources.
Now, obviously, best valuable places for city are those that have resources, but there is one big ramification of having logic as this.
On every map there are big patches of land that have no resources. Those will stay empty all the time, since no AI would build city there and would become magnet for monster spawning.
Also, if there is a resource on the other side of empty patch, AI would travel through it and build city on the other side, making a lone outpost very vulnerable to attacks.
On the other hand, smart player would build level 1 cities (or level 2 if having plenty of food) to fill critical parts of the land without resources, and keep his kingdom contiguous, thus reducing number of places where garrisoned troops are needed.