Your Sims will build houses, shops, and factories on their own, but you need to provide things like police stations, hospitals, bus depots, water towers, sewage outlets, and power plants. Here's Foozle's City Hall, which I plopped in the lower-left side of my totally inefficient circle street. It's the first and most important civic structure, because upgrading it with department wings gives you access to new structures. As you can see, I did not know what I was doing when I added the wing on the left.
All of your ploppable buildings can be upgraded. I like the fidelity improvement—it doesn't make sense to drop hospitals all over my city to fix my healthcare problem when I could just make one bigger—but it turned into the most tedious part of the game for me. Some decisions are clear (extra windmill equals more power), but others are not so clear. My residents are upset about too many "germs" in the city, so, I guess I'll add more stuff to my clinic?
I just couldn't tell whether upgrading a building was better than building a new one elsewhere, or if bulldozing a house so my school could have extra classrooms was the right decision. I feel bad knocking over someone's house, but the simulation often requires it. What if they're in there? Eating TV dinners, watching reality shows (I hear The Sims 3: University Life is popular)... is that just progress? I guess I wouldn't make a great politician, and maybe I needed to spend more time digging into the stats to make informed decisions.
That minor confusion aside, these structures are the balancing act that keep you active. Growing cities constantly need more of everything, so you've got to find the funds and space to keep the power on, water running, sewage flowing (away from the water, ideally), and so on until you reach equilibrium. It's a tricky and engrossing tug of war. Too much sewage! Build an outlet. Too much pollution! Build a sewage processing plant. Not enough power! Build a coal plant. Too much pollution! Dammit.