Sim City was a global phenomina which basically created the whole genre of 'building sims', games where a player constructs a city, a hospital, an amusement park...just about everything! This is a selection of the very best building sims set during European history.
When some people think of European history, they think of the castle, and theres no finer use of castles in a computer game than this. Although the basic aim is still to conquer all your medieval enemies by force, the bulk of the game is concerned with designing and building your own fortifications - including huge castles - while crushing others. Of course, you have to earn enough to pay for everything! This castle-sim has a technically superior sequel, Stronghold: Crusade.
Rome: Total War gives you the chance to conquer Rome, Caesar III gives you the chance to build it. This is, to be blunt, simply Sim City set in the Roman empire, with your aim the creation of a working city complete with temples, roads, markets and, hopefully, no invading barbarians. The game is a bit old and the graphics outdated, but its hard to see anyone creating a better Rome-Sim City.
Although more a real time strategy than a city simulation, Medieval Lords does place great emphasis on the creation of medieval towns, even using a full 3D engine to showcase your work. The subtitle Build, Defend, Expand should give you an idea of the priorities involved in what is an enjoyable, if not based entirely on real life, game.