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Still have no idea what build range is supposed to do and doesn't seem to do much of anything besides limit people for no real reason but alright.
It's a key mechanic for several things, like letting villagers know what is 'safe', defining perimeter for guards to patrol, if you have any, and stopping regular monster spawning from occurring within it.
Walls block it so villagers don't wind up running into dangerous areas to do things, likely getting themselves killed.
TL;DR - It exists for game mechanics/balancing reasons.
I see that now, as it's more to do than just buildings, but I don't see why it also has to block placing buildings as well. As what you defined it sounds more like it's for the AI knowing how to survive, but the AI doesn't place buildings.
I agree that it is really annoying when building wall mazes, tho.
I never make outposts/barracks because of this reason, there's no way to keep them in places you want.