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There are several threads about this already. It does a reverse lookup on the NPA/NNX (area code + first three digits of a phone number) to tell you what city the incoming call is originating from. So far, nobody has found a way to uninstall the application and, correct, it is crippleware and will deactivate itself (but remain installed) after 15 days.
The phone is phenomenal, but nobody is very happy with HTC putting this, along with a few others (Peeps, Footprints, Car Sense) on our phones. We didn't choose to have these applications, and we should have an option to uninstall them if we don't want them, but we don't.
We may need to wait for an Incredible root to be released before any further progress is made with CityID and the other bloatware.