Think of the default parameter values as arguments to the initializer for the function object. If you passed a list into the constructor of a class, you wouldn't be surprised that if you modified the list outside the class that it would modify the same list inside the class.

While that explains how it works, I actually completely agree with you. This is surprising behavior and, in a language that prides itself on not being surprising, seems, well, surprising.

I have to wonder if performance isn't the big reason for it. If your default is [], it isn't a big deal to re-evaluate, but if your default is get_default_cities_from_slow_web_service(), having that re-evaluated on every function call would be catastrophic. Given the choice between two negatives, the choice they made is probably reasonable.