[p1necone]

Is this not done because of technical limitations, or is it just not done because a town building game with millions of entities would not be fun/manageable for the player?

Although, there's a few space 4x games that try this "everything is simulated" kind of approach and succeed. Allowing AI control of everything the player doesn't want to manage themselves is one nice way of dealing with it. See: https://store.steampowered.com/app/261470/Distant_Worlds_Uni...