Circles are maximally efficient at holding the largest possible area within a finite perimeter; this is good because it means you can maximize the amount of “room” you get when you have a limited amount of “wall” to build a single room with. Unfortunately, if you push a bunch of circles together (think coins on a table-top) there will always be some empty gaps in between.
Rectangles, on the other hand are maximally efficient at “stacking” alongside other rectangles without leaving empty gaps in between; but technically only have at-most 78.5% the internal area compared to a circular room for a given amount of wall perimeter.
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In modern cities, most buildings follow the rectangular convention because most are multi-room structures that want to minimize those kinds of empty gaps (and the same goes for adjoined buildings with shared walls); additionally, there is the added benefit that construction is faster/easier/cheaper if everything is done at right angles using rectangular-cut lumber and other building materials. (When comparing apples-to-apples of having a single contractor build a square-home-with-square-walls versus having them build a circular-home-with-curved-walls on the same/similar lots.)
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