Corrected entry: The City is perpetually set at night, because the Strangers are allergic to sunlight. Every time the clock strikes midnight in the film is when the Strangers "Tune" the City and change things, etc. After each Tuning, the clock (which is stopped at midnight) continues moving past twelve. There are two problems with this: one, there is no daytime in the six or so hours after midnight, which is to be expected for an average city, like this City is supposed to be (as opposed to some place like Alaska). The other problem is that very little - TOO little - time elapses between Tuning sessions, and surely somebody who didn't have their memory changed between Tunings would find it strange that it was suddenly midnight again (and I mean somebody other than John Murdock). This is a very big flaw in one of the most pivotal aspects of the plot.
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Correction: The strangers, who appear to have some reasonably powerful psychic abilities, have fixed things so that the people in the city don't notice the inconsistencies in their environment - no daylight, never leaving the city (and not even knowing how to) and so forth. Given their total control over the city, it's not unreasonable to assume that they could manage this. The only time anyone notices is when Murdock, who's outside the Strangers' control, points it out to them - the rest of the time, they either fail to notice at all, or they rationalise it away. Some sort of mental block is presumably involved - probably psychically reinforced during every tuning session while they're sleeping.
Tailkinker ★