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Yup that's the advantage to them, you can save on needing holo-theaters or whatever to keep stability high on worlds with extra building slots. I sometimes use them on energy/mining worlds to keep those pops on their jobs. Sometimes I also find that small worlds will end up having -1 housing when all the jobs are full so plopping down one of these fixes that issue without having to redesign the districts.
They're a handy placeholder building if you've got a big empire and you want a fledgling colony to sit a bit before you get back to it. Slaver empires can benefit from them if there's a shortage of designated "domestic servants." Generally speaking, though, there's never a dominant use case for them. At best they're a cheap temporary building to a hold a slot until you've put something more valuable in it or to add a bit of color embellishment to a world.
Namely they're there to help solve housing issues when districts are at a higher premium than building slots. You use them more when you're a gestalt or with habitats than with normal empires. Which is why I think so many players never touch them.
Most resource districts provide enough housing to cover the jobs they produce. This isn't the case when using bonuses that add jobs per district or planetary buildings. Meaning the housing has to come from somewhere else. I mean you could just build a few city districts.... but with all the bonuses you're likely to stack on say an foundry world, it's more efficient to grab the housing from a buildng than to sacrifice 2 alloy jobs in exchange for a clerk. It's fewer amenities for excess housing and a waste of a pop for the planet in question.
There's perfect for a niche game where you want to troll yourself hard :).
City districts also give housing, but each district consume about 4 planet capacity on most planets. So, city districts tend to have less net effect on planet capacity than luxury residences/paradise domes.