During the time shortly before the The Great Revolt (The First Roman-Jewish War) of 66-73 CE, Jerusalem certainly had a true strategic significance. Jerusalem was not only a center of religious activity and pilgrimages, but was also the chief administrative center of taxation and governance for the Province of Judea. The income from religious tourism alone made Jerusalem a regional economic center. By the death of Herod the Great in 4 BCE, Jerusalem was the capital of a kingdom that ruled much of what is today Israel and Jordan.

Tacitus recounts that the population of Jerusalem at the time of the Seige in 70 CE was 600,000 persons. This without doubt a massive exaggeration, and should not be taken seriously. Archeological evidence suggest that the regular population was probably around 20,000 people in the first few decades CE, which still made Jerusalem one of the bigger cities in the Southern Levant.

I don't feel qualified to discuss the strategic importance of Jerusalem during the Crusader Era.

edit: fixed dates