If I were going to dedicate the amount of effort that sort of dynamic map would require, I doubt that's what I would do.
If I were to implement a dynamic map, it certainly wouldn't have a "Build City Here" button or anything like that. It would rely on quasi-realistic population dynamics to determine where a city would generate naturally, with some noble (i.e., player) actions influencing that.
But anyone who wants to just declare a spot a city? They can have a flag and a nice big town hall in the middle of the woods if they really want.
Cities aren't created by having a bunch of buildings. They're created by having a lot of people.
People don't amass in places randomly. Sure, as much as the modern world is filled with ghost grandiose pre-made cities that came out of some urbanists' phantasms, doesn't mean that growth cannot be influenced. Places without infrastructure don't grow, places with infrastructure, resources, trading potential, and defensible positions grow.
I didn't mean "click here to add +500 000 people to this region and thus form a city", but rather, infrastructure that increased the max pop limit, to allow the city to grow organically.
