Cities are only used in the "Traditional Search" facility.
This will allow you to customise the drop down list when the buyer needs to select the City he/she is interested in.
The drop down is dependant on the "County" drop down, so if you have a City disabled and have property listed in one of the Cities, they will not be displayed as the buyer will not be able to select the City.
To manage these log in and navigate to the Administration Section » Dashboard » Manage Property » Cities
This is a simple screen to change the type or add a new City to a specific Region.
You need to add at least one county before you can add any Cities.
You can filter the "Country" and "County" to only show Cities within that country / region to make it easy to manage the cities.