You read my mind. City builder games are unrealistic in a bad way that defies intuition and prevents you from modeling a real city. This has been my huge frustration with Cities Skylines, which looks great but where ambulances take three months to reach patients.
I think the problem is that a realistic city builder is going to require too much processing power and would probably be unfun.
If you want traffic that moves in real time, then your day/night cycle needs to also be real time: 24 hours. That means that if you're only playing in 2 hour gaming sessions, it's going to take nearly 2 weeks to simulate a single day. For those that truly want realism, that's great. For most gamers though, that's gonna be a non-starter.
So of course there's a problem: You can either have traffic moving in real time, or you can have a reasonable day/night cycle length. You can't have both.
The compromise that city builders make ends up with what you said: Ambulances take 3 months to reach patients, even if they're only traveling a mile.
That said, I do think that Cities: Skylines could do it better. The amount of semi-truck traffic in that game is absolutely insane. Easily 4x what it needs to be. You make an industrial district that's only ~1/2 of a square mile and it's an absolute zoo of semi-trucks, requiring some crazy traffic engineering to make it not be a gridlock.
Imaging the simulation being running headless, decoupled from the GUI client