We are receiving an overlap Location error?

 

Radius around cities is used by default and cannot be removed/made smaller (limitation on Facebook's end regarding this type of campaign). A number of locations will have to be reduced and those locations cannot overlap between them.
Location overlap needs to be checked before they are used for this type of campaign. If you add them to a draft adsets, Facebook will show you the radius for that location. If you add more of them you can see the overlap between them.