Actually, it can make sense.  The people who come are survivors living around the village.  They see no advantage in joining in and paying taxes, until they see a nice wall and a well... As for the capital, food was the limiting factor for city growth in history.  Every time there was a societal breakdown (Micean, Roman, Shumerian) the big cities died out because they could not feed themselves, and small cities popped up everywhere.  Fallen Enchantress starts in such a period.  The culture needs to advance before truly great cities can emerge.  In game, that's infrastructure and research.

Of course this is just rationalizing, but at least it's easy rationalizing, as opposed to trying to figure out how the great wolf which barely survived a fight against the militia razes a town of 350 souls.

Some people fight against it, and some people fight for it.  I have never been involved in a gaming community where 20% of players were not fighting against ANY successful strategy.  Because someone brought it up a while ago, I visited the Dominions III community.  Nothing has changed since 2008 but the user names and the spell names.  The same discussions are going on, except that now it's Fomorians casting "Summon Morrigans" instead of Vanheim casting "Mistborn Wraiths" (or whatever, it's been a while)

Seriously, why shouldn't they be?!  How do you support a huge population when you do not control a lot of land?  You may notice that more than two thirds of my cities are called "Farm #X".   Makes perfect sense to me, and I enjoy it.  Sometimes, I play in a different manner, but then you bet my race is tailored for it. 

I have won insane with four of the vanilla races - Gilden, Resoln, Yithril, Tarth, and Altar.  Make that five.  I would probably not be able to do it with three cities, and enjoy it with anyone but Altar.

But what does it prove?  You cannot say 'You can't win on Insane difficulty, with a particularl strategy and a race designed to be bad at it' and expect this to prove anything.

Fallen Enchantress provides at least three distinct mechanisms to allow you to win with a few, really strong, cities (henchmen, slave lords, arcane monoliths)  I know that two of these are enough to win even on Insane.  I do not like the Slave Lord perk for thematic reasons, and I have played it only once (I did win with a single city, but I did have monoliths, too)

Respect  

I understand your point, i just somehow dislike the idea of cities development stopping abruptly - yes, not even slowing down, but just stopping dead - and forcing me to do civic research.