All map squares have their invidual amounts of air pollution, flammability etc. How do they affect the actual city? The amount of air pollution in a city is the sum of all the worked squares of the city? If so, is there any reason to place civilian units like park rangers (who lower air pollution etc.) on heavily polluted squares? Do they do their jobs efficiently when stationed in the city or do they work better when they're directly on heavily polluted squares?
The "city" has different property values than the square the city is on, and in some cases the values can be very different. Ok say for example you have a 50 population (+50) city with a bunch of factories (another +50), for a grand total of +100 air pollution per turn. Every turn it will increase by that +100, but then lose 4% of its total naturally through decay, but it also loses 5% from the city to the plot under it. The plot gains that 5%. (I don't know which order this occurs in.)
The plot under the city will also decay 4% every turn. It will also give 20% of its value back to the city (whether the number is positive or negative), making the plot under the city quite important. Say the square consistently ends up with 100 air pollution, that's +20 air pollution for the city every turn. It will also transfer 4% to each of its adjacent squares (including diagonal), unless they are peaks or oceans. Those squares will also decay and diffuse, and will be affected by jungles and forests and things.
In the end you have cities with very high pollution, the squares under them with relatively high, and then fading out from there. If you've ever built a city in a mountain pass or on a mountain square you will
definitely notice the difference with the plot-to-plot diffusion alone, I've had cities like that with 40+ unhealthiness and major global warming, over 1200 air pollution, in the early classical era and only 15 population! Those tiny single-digit percentage points matter.
Anyway to answer your question it's mostly that 20% thing, that's how the square under the city makes a difference (I have an older svn it might have changed). It applies to both forms of pollution, and crime and disease too. City population increases all these properties, they decay at 4% for cities and plots, the city transfers 5% of the total to the underlying map plot, the plot gives 20% of its value back. A park ranger takes away 10 of both pollution types each turn (or is it 5? I'll just assume 10). Getting pollution out of the city is the best, but decreasing the pollution on the square under the city makes a big difference too.