Terrain effect question

Refer to link below.

I noticed that the terrain seems to be associated with the road not the whole province as this one does not have forest to the north. Are we to assume terrain effects are included in combat when units are on the roads but not the city?

Also, with respect the the modifier does it apply equally to both attacker and defender. Or is the defender assumed to be entrenched if not moving and not in battle formation.

http://gyazo.com/096792aaa83ba1232e31c1ae0627f1e2