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What's the advantage of this over the geonames database (CC-BY) which seems to be more comprehensive ?
Probably licensing. This one's public domain.

It is indeed extremely incomplete.

The GeoNames geographical database is available for download free of charge under a creative commons attribution license.

Is that too restrictive?

> Is that too restrictive?

For someone who doesn't want to have a "credits" page in their app, sure.

Based on the fact that this database is free and public domain, apparently it's possible for such data to have a restrictive license. So, I'm wonder what the sources of this data are? Is it compiled from public resources from the governments listed, determined and measured by hand by visiting the countries (with a GPS device in hand :P), or something else? I couldn't find this information on github.
How hard would it be to generate that kind of data from Wikipedia ?
quite incomplete. why not ask github users to fork, contribute as fixtures & send pull request
There is a UN office in Berlin devoted to Geographical names. They issue a 179 page manual about the standardisation of such names, but it is unclear whether they produce lists that could be used as the definitive source for a database of this kind.
Why is this a ruby project, and not just a plain files to create the tables, and insert the values?

Also, please teach him something about database normalization. e.g. capital should not be a flag of cities, but a foreign key of regions and countries. Cities, Regions and countries should be combined into one table, with a foreign keys pointing up and down the chain, from world down to suburb level.

"please teach him something about database normalization"
If the Heroku app is up to date, there are only 62 countries and 126 cities and all names are in German. I think this should have been mentioned in the Github page.
Agree, somehow incomplete info of the current status of the project. It can be ambitious and in an early stage but just say it!
Shouldn't there be location info for each city? A long/lat field?