So basically should you build just one industrial zone per 3 or 4 cities that overlap (within 6 tiles)? Am I reading this right?
1) Exempt if you have good spot surrounded by mines (gettng +3-5 prod.)
2) Have Industrial city states as allies (+4 prod. from district is good)
3) Use policies that enhance industrial districts (that means +8 prod. from industrial city state allies and more with many mines)
Still, even with those conditions, it could happen that such city does not "need" factory or power plant, since another city is sharing its bonus. Which is kinda weird.
I would expect at least some benefit of having local factory, even if another is in range.
EDIT:
Actually, that factory can still be useful, if district is placed as such to benefit some 3rd city in its the range, but oustide in the range of the city that shares factory bonus to the current city.
Of course, now IZ need to be better dispersed over map, instead being clustered to be most effective.
I think what is nerfed the most is Toronto range bonus, due to adding too much overlapping of the IZ districts, even if dispersed.