A City is physical city, e.g. London, that can have one or many Areas associated to.
Ensure you have added a region before adding a city.
Go to Admin, Geography and select City.
You will then be shown a list of existing cities in the system. Select Add City to add a new one.
Enter the name of the city and then select the search for Region.
You can then associate your City with a Region that you previously have created in the system.
Save the City.
Go back to the Cities tab to see the new city that you have created.
Next step: Adding an Area