I can't comment really on the star fortress design as that's pretty much an early-modern through just normal modern warfare thing. I will say they're very cleverly designed to make sure your cannons can target pretty much all angles of approach and they're good fun to take a walk around.

From a medieval context you seem to be conflating two similar but different types of fortification. You've got walled cities, which usually have attached fortresses, and you have free standing castles. While a free standing Castle will often have some industry inside of it it's generally limited to what the castle requires to function and nothing else. For example, Conwy castle in Wales has a bakery but not a jewelers.

A castle on its own can often provide key strategic advantages, depending on the type. The two I'm most familiar with are: guarding a key position/pass and housing an occupying force (occupying is being used a bit loosely here, I hope you'll forgive me). The best way I can think of to explain this is with a couple of examples. I also want to throw out one last caveat, many castles I'll call 'free standing' would likely have some kind of settlement near them. Castles were big focal points. People would often settle around or near the castle since you could be sure of a market for your goods that would stay there and you could probably flee inside in case of an enemy raid. These settlements wouldn't have been planned out by the castle builder, though, and wouldn't generally be the size of a full city.

First up, Sterling Castle in Scotland. Sterling is definitely part of the former category of stand alone castle. Sterling Castle was unsurprisingly located near Sterling Bridge and Sterling Bridge was the only real land entrance into upper-Scotland. The rest of the border was either a fairly uncross-able river (the Forth) or else pretty miserable marsh land that no one wanted to march through. This made your options for getting deeper into Scotland either building boats to cross the river (not an easy task) or crossing the bridge. The castle's location near the bridge guaranteed that some force would be present to oppose an army intending to march across the bridge. If an army too large to engage in battle did come to Sterling the army couldn't realistically ignore the castle. If they just marched on into Scotland they would have to find an alternative supply line, often naval in origin, because the garrison at Sterling could be relied upon to waylay any supply caravans heading over the bridge. Basically Sterling was a pain in the arse if you wanted to invade Scotland, unsurprisingly it spent a lot of time under siege.

In contrast to Sterling let's talk about Edward I's Welsh castles. Edward I built a number of new, and impressive, castles in Wales in addition to restoring several already built castles back into working order. This was in the wake of his conquest of the principality and largely served to establish his control over the region. The castles guaranteed that Edward had a military presence all across North Wales (the primary source of rebellions against him) and the castles were spaces such that they could easily come to each others aid in case one was besieged. They were also accessible to the sea so that Edward could resupply them and/or land an army near them in case of a serious threat to the region. While I want to point out that the sort of castle building campaign as means of establishing control is pretty unique to Edward I (the Crusader Castles in Syria are the closest I can thing to a similar endeavor) he mostly had to do this because Wales had little in the way of already established Castles. In the Hundred Years War Edward III could instead take already built French castles and achieve a similar level of regional control as Edward's Welsh castles gave him without the difficulty and cost of building his own.

As for walled cities...I actually don't know very much about them. Sorry! Hope my answer was at least some help though!

Most castles were like islands of safety in dangerous lands in the medieval/feudal times. They would act as bastions for nobility as well as guarding key terrain like bridges, mountain passes and ports. After the 13th century when cannons and then firearms became more prevalent castles evolved into a more low lying and angular ground shape using logical angles and defense in depth to defend key points and encompassing larger areas like towns. By the 18th & 19th centuries cannons and mortars became so powerful that fortresses had to be so large and thick walled that it became impractical to defend whole cities with walls and ramparts. From the point where the attacking forces opened up the first saps (zigzag trenches dug towards the fortress to gain ground and remain under cover), the time it would take the besiegers to open up a breach in the inner rampart walls could be caluculated with fair precision.

TL; DR Powerful cannons and high angle artillery made spending millions on defending a whole city with ramparts and ditches impractical.