The developers are currently working on OSM similar to X-planes, and have already shown some results of their experiments. (importing the entire world's roads) Tonywob has already donated his world2xplane buildings, and has expressed his interest in eventually doing some work on Outerra. In the meantime yup, Outerra is mostly about creating the earth, (and eventually other worlds) which is the reverse of how most sims do things. (which is to usually start with the planes) I suspect this reversed approach will lead to a planet detailed quite a bit past our usual expectations for a world for our planes to fly in, and obviously I'm one of those looking forward to that. Still, other people have asked how Outerra handles large amounts of objects, and there have been some promising experiments, indicating that the answer is "Very well". One recent experiment was Acetones "Chaos city" where several thousand buildings (with shadows active) were placed, with almost no significant impact on FPS (about 5 to 8 fps) Another experiment was using some low poly models with no LODs, and a 7000*4000px texture (with mipmaps) on a fairly modest system (Intel I3 3.40GHz, AMD Radeon R9 200) with the result of FPS between 45 and 50. (which is just about usual for that card anyway, buildings or no buildings) Finally a video showing a large city, on a very low end graphics card. (Nvidia GT 640)
So I guess the answer is that yes, right now cities in Outerra are sparse, but when Osm is finally fully implemented, things (hopefully) will be amazing. In the meantime, people are making their own towns and cities with the provided (alpha) sandbox tools to place houses, rivers, roads, buildings...... In fact just about all currently placed scenery is from users............. which makes me wonder what professionals might accomplish, when the tools are complete and polished. I think Tonywob is wondering as well. Developer video, scenery editing tool progress.