Can anyone describe the effects of the 'Health' rating that terrain squares have? I can't find it in the manual, except to say that a square may have a health rating of 0 (normal) or a health rating of 2 (adjacent to fresh water). what effect does this have on my city?

If your city is built on a square with fresh water, it gets a bonus +2 health modifier, which improves its ability to grow. If its square doesn't have fresh water, it doesn't get that modifier. You can tell if a square has fresh water when you mouse over it.

I assume that if you have the terrain bonus health rating it will help you later on when your city grows. Otherwise you'll be building granaries, aqueducts, and groceries much sooner.

The health rating is more important the bigger your cities get and the more production related improvements you have. If your city is surrounded by fresh water your city can grow a lot bigger before you need to start building health improving buildings like aqueducts and grocers. Terrain like floodplain and jungle have a negative health rating. I once built a city that was surrounded by floodplains. The city grew way too fast and it was covered in a green fog for about half the game.

Ahh, okay. So it's another Pop modifier, like Happiness, for us to worry about. Thanks all for the insight :)