Does placing buildings next to the coast work in Clash of Clans?

This a good question, and pretty much every new player gets duped into doing this at one point or another. The answer is "the edge of the world is not a wall". You can try for yourself and see that when attacking you can drop troops outside the edge of the map. Villages that attempt to use the edge as a boundary quickly learn it doesn't protect you.

Source: Personal Experience

It works to some degree because the edge of the world can be more difficult to place troops. Sometimes deployment requires multiple taps instead of holding down your finger to release troops. Not being able to unleash your army in a timely manner can mean less percentage destruction. You don't have the massive firepower you normally would by holding down your finger to release troops.