> People who live close enough to services get an additional happiness bonus for living close to the service on top of getting their needs fulfilled. The service still operates citywide...

I agree - and here is where things start getting indirectly complicated/irrealistic:

1) e.g. the ambulance or the garbage truck get deployed from the opposite part of the map and then they get into traffic and they needs ages until they reache the target location, which is when my citizen is already because of "natural" causes or was choked to death by garbage.

2) I honestly don't understand how living just next to a hospital should increase the property value. "Nearby", yes. "Next-to-it" no (noise & lights & people in weird situations targeting the hospital walking by all night long? Definitely not an area where I'd like to live, hehe...).

To 1, yes, that happens. Makes it impossible to have cities where not every area is connected by roads. It's also why it is so important in this game to not have traffic jams. There is a recent mod for this however: https://steamcommunity.com/sharedfiles/filedetails/?id=16808..., Most Effective Traffic Manager. It changes how the routing works and tries to combat exactly this. Though I could not just add it to my current rather large city, it dies with null pointer exceptions. It might work better now that it got some patches or when starting from scratch.

The "too close is bad" is done by noise pollution. I think hospitals do not emit noise in Skylines, but the cars going to and from do, and other buildings have that built in, especially monuments, malls and metro stations.