Cities gain specializations at City level up. First two level ups are more important for specialization, after that its mostly about neat toys.
First lets start with the generics (regardless of path)
level 1: Garden, Workshop, Lumber-mill, early game national wonders
level 2: Watermill, Early game World Wonders
level 3: Docks, Blacksmith
level 4 (at level up) -> Famous specialization pick
level 4 -> some late game national wonders
level 5 (at level up) -> Legendary specialization pick
level 5 -> most late game world wonders
level 2 (at level up) -> Pick between Training Yard (fort), Market Square (city), or School (tower)
**possibly allow other choices as well, but each turns the settlement into either a fort, city, or tower.
-----> I'm using the term tower here loosely. Tower settlements are focused on Research and/or Magic
level 2 Forts -> Bell Tower, Barracks, Pallisade
level 2 Cities -> Inn, Trade house, Brothel
level 2 Towers -> Apothecary, Chapel/Temple, Mage Guild (enables/bonus to staff units?)
level 3 (at level up) -> Castle or Command Post (forts); Town Hall or Merchant's Guild(cities); Library or Monastery(towers)
level 3 forts:
all forts can build Militia Barracks
Castle enables: Moat, Stone Walls, Dungeon, Gallows
Command Post enables: Armor Smith, Weapon-smith, Officers' Quarters, Quartermaster
level 3 cities:
all cities can build Fountain/Statue(prestige) and Crop Rotation(food)
Merchant's Guild enables: Farmer's Market, Tax Office, Arena
Town Hall Enables: Mason's Guild, Courthouse-> Guillotine, Theatre
level 3 towers:
all towers can build a 'Wizard's Tower' and 'Magical Ward'
Library enables: University, Archives, and Alchemy Lab (research focus-> research and advanced potions)
Monastery enables: Cathedral, Holy Shrine/ Sacrificial Altar, and Oracle (magical focus-> ie mana and unit buffs)
Level 4 -> After 'Famous' level up, previous choices will affect available buildings
Merchant's Guild enables: Bank improvement, and national monetary wonders
Library enables: national research wonders
Monastery enables: national magical wonders
Castle enables: Citadel Walls
not having a castle enables: City Walls (only as effective as Stone Walls, and more expensive than Stone Walls)
Command Post enables: Military national wonders
Town Hall enables: Governor's palace, and national prestige wonders (such as Throne of the King/Throne of the Emperor)
Level 5-> 'Legendary' level up
any level 5 city can build a number of available World Wonders
some world wonders rely on your level 3 level up choice.
Perhaps add buildings that complement your "Legendary" level up choice? (unlocked by the legendary level up choice)