Okay so datamining of models suggest that the details of cims are way overworked with 40 000 polygons or more for details you cannot see in the game (you can't zoom in that far).
The performance of the game is... not good for a lot of players that struggle with framerate dips down to <10 fps on 30-series NVIDIA cards.
I don't know much about gamedev or 3D modelling but this seems like an odd choice.
@moondog548 Scuttlebutt is that Life By You, Paradox's The Sims clone, is planned to be integrated into Cities Skylines 2, so they outsourced the creation of all the CS2 cim models to another company, Popul8, and they were tasked with making models that would work in both games. My guess is there was a miscommunication between the two companies on providing some LOD models for CS2 so it wouldn't have to try and render all of the "The Sims"-level details. But that's all just "big if true" speculation.