Not only does it provide great experience, but it also provides some combat action. Combat, is strictly limited in this game. And I mean hours. On my fourth attempt I was able to destroy my enemies easily and within an hour of producing my first large battleship, but it took nine hours to get there. Capacity planning is critical.
Every building has a service area.
Homes built within the service area of a marketplace have access to supplies and food that helps citizens advance. Moreover, your homes will need to fall into the service areas of future buildings as well. If some homes do not fall into the service area of the doctor, then they will suffer and die from the plague. Likewise the fire brigade, schools, taverns, churches, public baths, and others all help attract more citizens to your settlement. Everything is not perfect in paradise however, as there are several glaring flaws in 1602 A.D. that will cause every gamer to grind their teeth to nubs.