Aaah, by formation I thought you meant the way in which the cities formed in history. How they started as villages and grew to become cities. However the positions I can explain easily.
Ok, well the cities are in a pentagram with the Golden City at the northern point of the star. Then, at North 72° East is the city representing Water, at South 36° East is the city representing Wood, at South 36° West is the city representing Fire, and at North 72° West is the City representing Earth. The cities are in this formation because the pentagram both amplifies magic and is an extremely potent symbol of protection. Understand?