It can but then they are heavily dependent on external sources of food, water, raw materials, manufactured products, etc. that are outside of its control. This gives the outside nations who are supplying those things larger influence on the domestic and foreign policy of the city-state because they can raise costs of imports or even embargo them to pressure the city-state to align with their own foreign policy goals.

Because you really don't want heavily polluting industries (oil refineries, chemical plants, steel mills, etc) close to a big city.

Why aren't obese people healthy? they have so much (cellular) wealth stored up and such big organs.

Ir's not that different. If you concentrate economic wealth in cites, the periphery starts to suffer economically because it can't exploit local resources effectively, and the population starts selecting for city activity. Over generations, that leaves you vulnerable agriculturally and militarily. If you experience a natural or military disaster that deals a massive blow to one of you key cities, the whole country can collapse.

Outsourcing some things can be an existential threat

edit: Note that China just the other day extended their 9-dash line to a 10-dash line

Agriculture.

Countries can exist with only big cities, but then they are dependant on other countries.

In small cities you among other things have more agriculture and different forms of industry are also commonly pushed out of big cities.