So I create a crap ton of cottages; this is obviously not the answer. It says your city must work them them to upgrade to hamlets. What am I missing? How do you make your city WORK.

So I create a crap ton of cottages; this is obviously not the answer. It says your city must work them them to upgrade to hamlets. What am I missing? How do you make your city WORK.
Cottages do not take citizens out of your cities; they don't make the cities happier or healthier. You assign a citizen to work a cottage in the city screen to make it grow and produce more revenue, but that's their only effect--a monetary one.

If your cities are unhealthy and/or unhappy, there are various ways to overcome that: resources, buildings, civics, and so on. Check the War Academy (http://www.civfanatics.com/civ4/strategy/)and look, in particular, at Cabert's articles on Ways into Health (http://forums.civfanatics.com/showthread.php?t=190583) and Ways into Happiness (http://forums.civfanatics.com/showthread.php?t=189559).

If are losing 13 food to sickness and have 13 unhappy people, your city is too large; PERIOD. You need to discipline yourself to monitor when your cities are about to go unhappy/unhealthy and remove all surplus food until you get more happy/health in your city. Once you have surplus happy/health you can reassign your citizens to bring in a food surplus and grow the city until you reach the new "cap". The links provided by Sisiutil will describe how you can raise those caps.

I guess the problem I am having is the white circles around certain tiles for assigning citizens. Not all of my farms/cottages/ect... are in the white circles, why I am not sure. I do not know how to assign citizens to certain circles either.

The white circles ARE the citizens. You should have as many white circles as you have population points IF you do not have any specialists (lower left of the screen) assigned. By clicking on a square that does not have a white circle you will place a citizen on that circle. If you click on a square with a white circle that circle will go away and a specialist will be assigned. Thus, in order to move a worker, click on the circle you want to move THEN click on the square you want to work.

Thanks Polobo :D

Or if you are new to the game you can just let the AI do the job for you. Click on the automate worker button (is it called like that?) in the lower middle of your screen. Then all you have to do ist check the "no growth" option if you see that your city will become unhappy if there is another population added.

Just remember to uncheck it once you have enough happiness to grow again.