KML (Keyhole Markup Language) is an XML based exchange format to describe GIS features on the globe. It has support for points, lines and polygons and is also able to reference 3D models through Collada. It is very popular to produce data for ArcGIS Earth or Google Earth.
KMZ is a compressed version of KML where all referenced Collada and texture files are contained in one handy zip like file.
CityEngine supports only Placemarks defining a 'Model', which in turn refer to a COLLADA DAE model.
The following 'Model' attributes are read: 'name', 'altitudeMode', 'Location', 'Orientation', 'Scale'. In a Model the georeference is stored in the Location attribute consisting of 'longitude', 'latitude' in degrees and 'altitude' in meters. The geographical coordinate system is always the 'WGS84'.
When pressing the Finish button and the current CityEngine scene's coordinate system is not yet set, a dialog will show up proposing the UTM-zone corresponding to the given longitude.
KMZ / KML import has no options. Simply select a ".kmz" file, a ".kml" file or a folder containing one or more ".kml" files by clicking on the Browse... button. When importing ".kmz", only a single file may be imported at once.
For KMZ as well as KML files, the easiest way to import is by first dragging either the KMZ file(s) or the folder containing the KML file and associated files into the CityEngine workspace from your file manager (e.g. Windows Explorer), and then importing it from there. KMZ as well as KML importers work on the CityEngine workspace.