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Japanese military industrial production was heavily distributed to tens of thousands of small workshops with only a few workers in each and minimal mechanization. The cities with civilians were themselves the factories.

They did bomb the largest military factories. That's why they moved their production to the cities.

The reasoning was to pick biggest cities that were not completely destroyed yet (as Tokyo and others were in pretty bad shape by that time). Military bases are small targets compared to a city, and I assume they wanted to make a statement.

The United States wanted to drop the bomb on a relatively undisturbed city so they could better-evaluate its effects. If you drop a bomb of never-before-seen power on a city that is already rubble, it’s much harder to determine how much damage it caused.

That's the whole question with Dresden (and "Slaughterhouse Five").