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Ok so I have been playing for about a week now and I wanted to write down what I figured out about the city hall, mostly because when I started I had no clue what it was for and I just kept ignoring it. Maybe this helps another new player who is as lost as I was.
When you start your town you get a few buildings already placed for you, and the city hall is one of them (the game calls it town hall in some menus too, same thing as far as I can tell). For a while I honestly thought it was decoration. It is not. The city hall is where you recruit new workers. That is basically its whole job, and it turns out that one job is the thing the entire town runs on.
Here is the part that confused me at first. I built a wood factory, finished it, and then it just sat there doing nothing because I had nobody to put in it. I did have citizens, but they were the ones I got at the very start, the founders, and you cannot hire those into new buildings. So your new buildings need workers, and the only way to get fresh workers is to go to the city hall and recruit them. Once that clicked a lot of other stuff made sense.
But there is a catch that also got me. When I tried to recruit a bunch of workers at once it told me the houses were full. Every new worker needs a room to live in. So before you can grow your population you need somewhere to put them. You either build more houses or you upgrade the houses you already have so they hold more people. I think houses go from a couple of rooms up to around twenty depending on the level. So the loop is basically: build or upgrade houses, then go to the city hall and recruit to fill those rooms, then hire those workers into your factories.
Another thing nobody told me. The city hall is also the center of your roads. Every building has to be connected back to the city hall by a road, at least a level 1 road, or it will not work. Bigger buildings seem to want better roads. When I built something off in a corner with no road back to the hall it just refused to produce until I connected it. So the hall is not only where you get workers, it is also kind of the heart of the town layout, everything points back to it.
One small tip from my own mistakes. Recruit a few extra workers before you actually need them. A lot of actions need free workers sitting around ready, like upgrading a building, cleaning land, even demolishing something, and if all your people are already busy in factories you are stuck waiting. Having a little pile of free workers from the city hall saved me a few times. Just remember each one eats a room, so do not go overboard if your houses are tight.
Also the workers you recruit start as plain unskilled workers. If you want professionals like cooks or professors you take these unskilled ones to a school and train them there. But it all starts at the city hall, and since you cannot train the founders, the city hall is genuinely your first real step into growing the town.
Anyway that is what I have learned so far. Short version: the city hall recruits workers, workers need rooms so build or upgrade houses first, and connect everything to the hall with roads. If you are new and your town feels stuck for no reason, go check your city hall and your free workers, because that was my problem nine times out of ten. And if I got anything wrong here please tell me in the comments, I am still figuring this game out myself.