Always good to see geospatial analysis, especially with the toolchain available in Python, these days!

One of the downsides of forming polygon from line segments in this way is that it implicitly assumes all lines have a vertex at the intersection of another line.

For example, something like this would fail ("o" represents a vertex):

    o      o  o
     \      \/
      \     /\
       \   /  \   o
        \ /    \ /
         /      /
        / \    / \
       o   \  /   \
            \/     \
            /\      o
           /  \
          o    \
                o

You can handle this in a couple of ways:

1) Intersect the lines before-hand, ensuring that you wind up with a vertex at every intersection. (In shapely's case, you'd call `shapely.ops.cascaded_union(lines)` before applying `polygonize`.)

2) Cut a bounding polygon with the lines, rather than forming polygons from individual line segments.

The second method has the advantage of ensuring that everything inside of the bounding polygon is split up into smaller, block-level polygons. Usually this is what you want, though for something like city blocks, you'd need to filter out non-urban areas (e.g. water).