When you conquer another player’s City, that City is converted into a Town. However, if the player reconquers their lost City, it stays a Town, and you must pay to upgrade it to a City.
This means it feels even worse to lose a City than previous entries of the series, where re conquering wouldn’t lose you anything. Making reconquered Cities automatically convert back to cities would fix this kick-em-while-they’re -down effect, and promote players continuing to play on, even in the face of adversity.
I can see some “flavour” appeal in having to re-establish power over the settlement, but I think from a user perspective, it’s not worth that.