This happens by design.
The lore says that the supermage ultimate ruler of the world accidentally killed himself and destroyed everything when he messed up a super spell.
The land is like after volcano or a forest fire, its barren NOW but it CAN be recovered and it will happen naturally over time.
As a gameplay mechanic, ZoC allows your populace to work to recover the land. Vegetation also expands from healthy lands naturally over time to devastated lands and recover those as well, naturally.
You can accelerate the process by building outposts.
The main problems I see in the current implementation are:
1. Elemental Lords ZoC does the same even when it shouldn't. (some elemental lords should, but only some... and those should be agressive towards invaders)
2. Razing a city permanently ruins the land in the city's ZoC such that it CANNOT recover again. (this is by design)
3. Default map settings creates a lot of lush fertile land that does not need recovering. You can switch to desert or swamp map though to force you to create all fertile land yourself and stop settler spamming.
4. Recovery inside ZoC is instant instead of taking time.
5. The visual difference between burned out and recovered land is too subtle, it needs to be way more obvious.
