Happy and healthy citizens are productive citizens. Happiness is influenced by diverse food, good housing, access to services (Market, Chapel, Tavern), and a lack of deaths. Health is primarily affected by food diversity, warmth, and access to medical care (Herbalist, Hospital). Unhappy or unhealthy citizens are less productive and more prone to illness.
To manage happiness, ensure a steady supply of various food types (meat, vegetables, fruit, fish). Build Chapels and Taverns to provide spiritual and recreational outlets. For health, prioritize building a Herbalist early, and a Hospital as your population grows. Ensure a constant supply of firewood to prevent citizens from freezing, which leads to illness.