We live in a house built in 1948. I have noticed the smell of sewer gas coming from a vent in the ground. We are connected to the city sewer. We do have a vent on the roof. Is it vital that I keep the yard vent unobstructed or can I plug it to prevent odors coming from it?

What you are referring to is a clean out pipe, not a vent. It is there so you can snake out the sewer line if necessary. It should be sealed.

I agree with harold, this is not a vent and should be an air tight cap that is only removed for rodding. What direction is this "vent" pointing, straight up?

And I agree with both Bob and Harold. You have a cleanout, (see image)that need to be capped off. You may purchase a clean out cover in your size from any plumbing shop or supply house. Do not leave this open. In addition to the smell debris can fall in the open hole and clog the pipe.
Good luck, Tom