I only have first hand experience with boston.ma.us and seattle.wa.us, and might have some of the terminology wrong but:
* Originally, anyone could ask to take responsibility for a locality, and serve as the registrar for it. Individuals and small ISPs did this en masse.
* Many decades have passed, many went out of business or became derelict in their obligation to administer their delegated subdomain.
* When this occurs, the responsibility rolled back up to top level registrar which today is GoDaddy (used to be Nuestar until they got bought). GoDaddy's policy is that they'll only give out a subdomain registration on a locality if you show them a notarized letter from the locality's government saying you can have it. They will _not_ delegate the whole locality back to a local entity to set up a process.
* No one in local government will furnish this letter, because it's logistically inconvenient ("no notary in our office") and there's no official policy on how to handle the requests ("all I can find is this state law that says we can't"). My representative declined, and even talking with the tech people in City of Boston only went in circles. I may have been the first person to ask, and they'd probably rather I registered an .e.g. .boston and left them alone.
Meanwhile for Seattle, the small ISP that manages the locality TLD is alive and well and will hook you up within the week for free. I registered http://rcr.seattle.wa.us/ while talking to the Boston IT people as a small demonstration that other similar localities have functioning ecosystems around the TLD, to no avail.