I have been complaining about this for several Betas now, but the issue lingers.
Issue: Neutral units and cities block all movement. Meaning, you cannot move through a city or unit belonging to another faction, at all. This is true regardless of non-aggression / open borders treaties, diplomatic relations, or any other factor. This is a serious, even game breaking, problem for several reasons.
1) Roads lose a great deal of utility because units can block their use. This includes caravans, which will obviously be a common sight on many roads.
2) Outposts and Cities block movement, on roads and open terrain. This would be a massive problem even if cities were 1-tile affairs only, since they can completely block all movement, creating a wall that can only be breached by war. Elemental maps tend to be crowded, with lots of impassible mountains and seas, thus allowing for cities that can easily block all access.
3) As cities grow, a path may end up being blocked off, trapping your units behind friendly lines. There is no way around this short of declaring war on your friend. An exploring unit or champion might then be trapped forever short of war. This undermines exploration and adventuring.
4) Non-aggression pacts do nothing to fix this. This seriously undermines the usefulness of this key treaty, and this diplomacy as a whole, since you may end up blocked by a friend.
1) Allow free passage for neutral units. A neutral caravan should not block an army. Hostile units block movement. This will fix the problem of impassible units.
2) Allow free passage through cities if a non-aggression / open borders pact has been signed. This will fix the problem of impassible cities and outposts.