A market is used as a centralized location for all goods that a town produces. Market vendors will visit many different stock piles and storage barns to collect the full variety of resources that the town produces - they are very useful in providing your citizens with a varied diet by collecting all the different food types.
Although a large number of your citizens can work at a market, having only one or two vendors working there will stock it sufficiently in the early game, and you will only need more working there once your town begins to become more spread out.
A perfect example for the marketplace is where you have one cluster of buildings producing firewood on only one side of the map - the vendors for a marketplace on the other side of the map will collect the firewood and bring it to the market, reducing the need for every house to make the journey individually.