My thoughts on the subject (which may just be me parroting one of Frogboy's posts from a long, long time ago, I honestly don't remember):
A- It makes the choice of where to place a city more difficult, and therefore more meaningful. Next to a forest, or not?
B- It would be a lot of coding I imagine in order to make the AI do it intelligently.
I believe that the improvements that can be build on a river face the same issue, correct?
That said... I really missed it at first, but after getting used to it, I do kinda like the fact that it gives certain sites the advantage, makes city placement more important. Not everyone will agree with this, and I am glad there is a mod out for those who want to have it in the game... but it will give you an unfair advantage over the AI, so you know (unless the mod also makes the AI do it intelligently?).