This is an over-simplification of the performance demands of the game. Keep in mind that there are many levels of computation involved in the simulation, from rendering loads to inter-agent complexity, to city management (i.e. taxes). It all adds up, and the graphics needs alone are the limiter in most games.
But beyond the "feather that broke the camel's back" rationale for offloading compute, keep in mind that there are issues around shared data that would vastly improve performance of region-level computations in the cloud. If the region state is maintained in the cloud, any computations on that state will be far more quick when done in a centralized way.
Further, there are fewer challenges around handling client desynchronization, which is a classic problem in large scale strategy games. Reconciling one or more desync'd client's state can get very difficult. Under a centralized system, the master copy reigns.
Obviously there are downsides, but it's not like it's a crazy idea to offload some of the compute to the cloud.