Your city can grow out to a radius of up to 5 tiles from the city tile itself. However, you can only assign citizens to tiles up to 3 tiles away from the city tile. So the 4th and 5th tiles cannot be worked. You will receive any improved luxury/strategic resources inside those tiles, but not any...
I think the main point behind them is so that archer units from the early game can be promoted without losing the effects of their promotions. However, being able to do what is effectively a melee attack without being damaged in return is pretty nice as well. You're going to hurt the other unit...
I'm admittedly not all that great a player, but it doesn't seem to me like it's a huge issue. As it stands, it just seems like trading posts came far earlier than you can realistically use them aside from puppet cities.
That early in the game, my cities generally need mines, farms, or...
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