Every citizen is a resident of a specific apartment or hotel (exclusive for Tourist), where he or she lives and goes to rest.
For example: Oldsters like to visit the church, so at several times during the day they have a high probability of visiting a church somewhere on the map. Each citizen follows their own individual day cycle based on the preferences set for their citizen type.
Every time you start a new game, a pool of citizens is created and spread throughout the city. The second most important part of the game is your potential customers, the citizens of your current city.