Building the refugee camp improvement from the feature itself, rather than from in the city, means that the city's population limit is not increased, even though the description of the camp says that it should still provide the increase. The camp was adjacent to the city, although that requirement isn't mention anywhere when you're actually building the camp, and shouldn't be a requirement anyway. Clicking on the camp after it was built confirms that its yield was "Population: 0, Resources: 2".