To elaborate on what Kongdej said:
If a city has 3 essences, you can put 3 enchantments on that city.
Some enchants give a bonus based on the number of essences the enchanted city has. For instance, Gentle Rain says "Target city produces 25% more food per essence." So if you have 3 essences, this single enchantment makes the city produce 75% more food. And then you can still have 2 more enchants on it.
Also, some improvements rely on it. For instance, the Cleric reduces Unrest by 5% per essence. So, for this example city it would reduce Unrest by 15%. If it had only 2 essences, Cleric would reduce Unrest by only 10%. 1 essence, 5%. 0 essences, you can't even build a Cleric.
There's a lot missing from the Hiergamenon.