First of all, see @MichaelKarnerfors's answer for why you cannot actually build this with mirrors. You'll need more sophisticated equipment that absorbs the sunlight and re-emits it towards Earth in a focused beam. The laws of themodynamics require you to waste a good portion of the energy in the process. Assuming you do this...
Solar irradiance to the Earth's surface, not accounting for atmospheric absorption, is about $1200\;\frac{\text{W}}{\text{m}^{2}}$. Let's assume that the full Moon is the same distance from the Sun as the Earth, and that the mirrors are perfect, so that $1200\;\frac{\text{W}}{\text{m}^{2}}$ of the moon's surface is reflected onto the earth.
The moon's surface area is 38 million km2. Given that half of it is illuminated, let's say we can use about 15 million km2. Focusing this on an area of 7 km2 means that the power delivered to the target is two million times that of direct sunlight, or $2.5\;\frac{\text{GW}}{\text{m}^{2}}$.
The first second
Initially, the atmosphere is mostly transparent. Normally, about 20% of solar heat is absorbed or reflected by the atmosphere; let's say 10% is absorbed by the atmosphere, which is $0.25\;\frac{\text{GW}}{\text{m}^{2}}$. In one second, this delivers $0.5\;\frac{\text{GJ}}{\text{m}^{2}}$ to the atmosphere.
The other 80% of the power, or 2 GW - shines on the land or ocean below. Everything flammable immediately catches fire.
Given that "the mass of a column of air with a 1 cm2 cross section is almost exactly 1 kg" 1, we can calculate how much energy is needed to ionize the nitrogen in the atmosphere; we have more than enough.
The entire atmosphere over that city-sized area would turn to opaque plasma in less than a second, sheltering the earth for a little while, until it approaches equilibrium (about the temperature of the sun's surface). Then it glows very brightly, delivering all its energy either back out into space, or at the ground below.
Afterwards
Let's say that half of the energy is radiated outwards, and the other half inwards, delivering about $1\;\frac{\text{GW}}{\text{m}^{2}}$ in each direction. Everything exposed on the surface is vaporized by the light of a million suns, and most of it turns to plasma too.
As for lakes, let's assume that the entire 1 GW is used to boil water. Heating water to its boiling temperature, then boiling it, takes about $2500\;\frac{\text{k}}{\text{kg}}$. If the clouds of steam and denser water plasma don't block the light, the weapon vaporizes water at 0.4 meters per second, which means a lake of average depth 40 m would disappear in about two minutes.
Worldwide geological effects would probably be small, since this light is a small percentage of what normally falls on the Earth, just more concentrated, and sunlight doesn't currently affect worldwide geology. However, I imagine that if the atmosphere doesn't spread out the heat too much, this weapon could create some volcanoes by melting a hole through the Earth's crust.
See also https://what-if.xkcd.com/13/ and especially https://what-if.xkcd.com/141/. The lunar reflector is millions of times weaker than focusing the entire sun in the latter link, so in this situation the earth's surface wouldn't be stripped away, there would be no x-rays, and people on the other side of the Earth would survive.