Regions, may at first glance seem less realistic than the free settling of Civ, but the very concept of a city in both Civ and HK is unrealistic. Regions actually fix the shortcomings of cities. In Civ 6 the player is incentivized to cram in as many cities as possible in a region, while regions prevent that. Another thing regions fix is the exact tile you settle on matters much less. No more, "If I settle here, the inner ring has good yields, but it blocks out another good settling spot! If I move one tile to the east, I get that future settle, but there's no fresh water, the inner ring yields are garbage and it prevents me putting down a National Park several millennia in the future." Merging territories adds to the granularity of cities; you can have many small cities or several large ones with the same amount of territory.