Your city is going into Civil Disorder. This means that there's more unhappy people than happy people in the city. What you need to do is make the people happier. You can do this by spending more on your Luxury Slider, building a happiness improvement, or hiring an entertainer. To get to the Lux slider, hit your F1 - Domestic Advisor screen. There will be two sliders on the upper right side. The bottom one is your lux slider. Try increasing it by 10% (one click).
You could build more happiness buildings, such as Temples, Cathedrals, Colesseums, or Marketplaces. This will help keep the pop happy. Marketplaces only help if you have 3 or more luxuries.
And you can hire an entertainer by clicking on the Center tile when looking at the City View. 'It's Too Crowded Here' is not the problem, but the default reason why people are unhappy. You can live with this. The only time you're gong to have too much pop in the city is if the city is starving, and all the tiles are being worked. You can live with that unhappiness 'problem'.
Posting a save will help us see exactly what the problem is, and we can show you how to improve on it.