Does that mean that ideally you should be saving the cities for when you have the galaxy under control for the most part?
Actually, if you wait too long to start the cities it'll probably be much harder due to the spawn points being closer to the AI homeworlds (since your border is), and potentially higher AIP.
Rephrased, are these supposed to be toys to help you win the game (if you can survive the challenges) or more of a... diversion that makes finishing the game harder?
At the one-city and earlier phases it's supposed to be roughly break-even difficulty wise in that you get hit with extra attacks but you've got a no-other-strings-attached golem-esque ship to use as you please, 2 mini-golem-esque, ships, and 8 fairly long range continuous-photon-cannon-of-minor-doom ships. If you keep adding cities after that, the difficulty shouldn't go up very much on paper (as you continue to get more and more of said ships) but in practice the AI attacks will get pretty intense so it will probably at least feel like the game is harder (and, probably it is).
The big thing in this is that you're basically pulling endgame difficulty into the midgame. Many of you in the past have expressed a desire for a different kind of endgame challenge because the standard one felt grindy. Of course, a lot of that has changed with other changes Chris has made, but this progression will provide another way of accomplishing that.
In short, it's not really supposed to be any easier or harder to win by following the Fallen-Spire progression than by not doing so. But it tends towards a more intense (and more difficult) experience over a shorter time.