I feel comfortable saying that the game has improved significantly in regards to monster aggresiveness towards AI units & cities. However, this situation here seems a bit out of sorts.

Out of pure dumb luck, I happen to be standing in that same square highlighted in the picture as Markin came up escorting a pioneer and founded this city. Notice the Slag is in his lair. He was there the entire time. He never attacked as Markin moved passed. Curious, I decided to just skip through some turns and watch the behavior.
On the next turn Markin escorted a second set of pioneers away. The Slag attacked, and killed them both. In this image Markin is currently locked in Sandraka recovering.
Three more turns and the Slag, who is mostly healed, never pushed the attack. He just sits there next to the city. On any turn, if I move my Sovereign down to the iron mine in the picture, the Slag will come after me on the next turn. When I move away, the Slag returns to his lair and continues to ignore the city, which has no defenders except for the beaten Markin and the city's militia.
Maybe there is a reason the Slag is ignoring the city, but if the monsters are supposed to be territorial, and they do actually try to chase me away, then I would expect to see it try to kill that weak, poorly defended city that is obviously a threat to its lair.
Edit: This was on Challenging.