When the Germans reached the outskirts of Leningrad, 4th Panzer Group was already due to be diverted southwards, to take part in Operation Typhoon. The Germans lacked the armoured forces to support the attack and moreover, as the sieges of Brest and Odessa demonstrated, storming cities was something easier said than done! It would have meant entering the second largest city in the soviet union, with minimal armour and air support, contesting streets that were already being fortified by the Red Army and which would be defended by 1000s of soldiers and civilians. It would have been a major undertaking and one that the Germans, already spread thinly (esp. In AGN's case), could not afford; everything was needed for the drive on Moscow.

Oranienbaum held out because it was bypassed by 18th Army during the drive on the city; 18th army also had to divert forces to the Tikhvin operation, and to hold the porous lines between it and the 16th Army. Enough forces were inside to mount resistance, and were reinforced by troops from the city, via the bay (and in the winter, the ice roads). It became for the Germans what the Karelia front was to the Leningrad Front during the siege, a quiet sector to rotate units into after having served on the Volkhov/Leningrad frontlines.

Robert Forczyk, "Leningrad, 1941-44"; Robert Kirchubel, "Operation Barbarossa"; Prit Buttar, "Between Giants: The Battle for the Baltics in World War II"