Hi,
1.
The zones can be edited via the menu System->Zones in HikaShop. It works on our demo website and on all other websites.
If you don't see the menus, it might be because you're using a specific back end template. In that case, you should go in your configuration and change the option "Menu position" in the Display tab and once you save, the menu system should appear.
2. You need to open your California zone on the zones listing. There, you will have a similar screen with a subzones listing where you will be able to add the cities of california.
However, to use the cities that you would create there in the address form on the front end, it won't be easy.
Especially if you want to display different cities for different states. Is that waht you wanted to do ?