They can move all they bloody well want in field combat, but no formation holding a street would smash itself into the wall so the enemy can just flank them. It makes zero God damn sense, and I also seriously doubt a Hoplite defending a gate would allow himself to end up halfway down the street instead of staying in front of that bloody gate.
It's the system. It basically comes down to "if you know this happens, then why do you let it happen?". The phalanx formation is kept absolute in the game. It's what holds them together, and its what makes them such deadly, cost-efficient units.

There could be a very easy solution by making the phalange buckle and break apart when the pressure is too high, and then get slaughtered by close range melee units, so this "unrealistic bullshi*" never happens. If that's ever implemented, if you place the phalange at the wrong place at the wrong time with wrong orders against high pressure, they'd be routing long before you can see this abnormalties which upset you so much.

But you wouldn't want this, would you?

As it is, unless significant casualties are inflicted and continuously shaken in morale, the phalanx men will hold together and never break until all of them are surrounded and gets killed. Considering that trait which makes them so deadly in the game, the "problem" you have is a minor penalty. Maybe you should consider that.