The City area of influence just doesn't connect well and often borders end up being a nonsensical mess, so I would like to suggest an Empire/Kingdom area of influence (Domain), which shrinks and expands based on city influence and the lay of the land (IE following terrain and natural boundaries). The purpose of the Domain area of influence would be to link cities together, and provide a pressure to build close to or within a nation's borders, while providing clear national boundaries and preventing the AI from just building all over the map.

Cities built close to other cities in the domain would have economic and influence bonuses, while cities outside the domain would have economic and influence penalties and produce no domain radius around themselves (only city influence). Certain buildings would increase the reach of domain, and players could ideally set policy decisions or take actions to scale it back or expand it as needed (so that players would have more control over their nation's borders).

This wouldn't completely negate the value of building cities clear on the other side of the map, it would just provide a pressure to build regionally to make more realistic kingdoms and empires. It would also create more of an advantage for razing captured cities instead of just holding them.