Hi! I'm the guy from Episode 69 of the AskHistorians Podcast who u/anschelsc mentioned in the other comment.

In the podcast episode I talk about a very specific kind polity in medieval Italy, the Urban Commune. But by the time of the Borgias in the renaissance, these Communes had pretty much disappeared. At this point in time, it's a bit incorrect to refer to the Italian states as "City-States." Although they were very often the result of single cities dominating their neighbors, they were for all intents and purposes early modern polities with well-defined borders. The territories of the Republic of Venice, for example, included the important cities of Treviso, Padua, Vicenza, and Verona, each with their own history, heritage, and proud citizenry. Indeed, the cities of Padua and Verona housed a university, while the capital of the republic, Venice, did not! The Duchy of Milan was also much more than the city of Milan and its surroundings, with a large University in Pavia, and important urban centers like Lodi, Cremona, and Como. Indeed, Gian Galeazzo Sforza spent most of his teenage years in the gardens of the palace of Pavia, not under a trapdoor in the castle of Milan as the TV Series "The Borgias" would have you believe.

Make no mistake however, the fragmented borders of the Northern Italian polities are very clearly consequences of power concentration in the hands of urban communities (Otto I of Germany disassociated the crown of Italy from the Italian dynasties that had contested it in 962, which certainly contributed, but Italy had been urbanized since the Roman era). So the convergence of so many individuals on points of authority in the cities, along with the influence of an "Artisan" class that could only exist thanks to the density of urbanization, meant that many cities adopted a unique democratic system of government. Although the system changed from city to city, most established a legislative council of leading families, and often, the leaders of local artisans of merchants guilds were allowed to participate as well. Milan, Verona, Florence, and to a lesser extent, Padua, gained a reputation as "Bully" cities in northern Italy, expanding their territory far beyond their outskirts, and eventually moved from democracy to monarchy as one family came to dominate the rest: Starting from the mid 13th here was a trend for one family in a city to dominate the others and either pay lip service to the communal institutions while really ruling alone (like the Carrara in Padua, the Dovara in Cremona, and famously, the Medici in Florence) or sometimes outright dismantle the commune, often via bloody internal struggle against opposing families (like the Visconti in Milan, the Scaligeri in Verona, and the Ezzellini in Treviso and Vicenza). Keep in mind, these families were still feudal landholders who held large estates and castles outside the cities from which they could call their own vassals to arms; many powerful lords, such as the Visconti's rivals, the Della Torre, were feudal lords of entire fortified burghs in addition to their various estates.

But this doesn't answer the second part of your question: if the political fragmentation of north Italy is a consequence of the unification of many city-states, why was Southern Italy united through the period? We're going to have to turn the clock back; specifically to the eighth century.

The Lombard Kingdom of Italy had continuously clashed with Byzantine Empire, which never really gave up on reconquering Italy. The Byzantines could only really hold some coastal cities, while the fertile heartland of the Padanian Plain was firmly in the hands of the Lombards. The Lombard King Desiderious (d. 786) got very close to finally kicking the Byzantines out; a successful offensive saw the encirclement of the Pentapolis (the five major Byzantine strongholds along the Adriatic Coast that to this day are called "Romagna" since the Byzantines were the last "Romans" to leave) which allowed Desiderious to march south against Rome unopposed. With the Byzantine army cornered in the Pentapolis and fearing a loss of independence for the bishop of Rome, who had been pretty much guaranteed a free hand to rule the "Duchy of Rome" (modern Lazio) in exchange for nominal Byzantine rule and military access, Pope Adrian cried "Uncle", excommunicated Desiderius, and asked Charlemagne to come to his aid. Charlemagne, even though he was busy conquering what would later become Germany, was immediately flattered, and marched for Italy.

Charlemagne marched down from Germany in two columns, one under his personal command taking a westerly route through the Valley of Susa, and another under his uncle, Bernard, through the Valley of Aosta. An ancient system of walls called the "Lombard Locks" (Chiuse Lombarde) sealed off the valley of Susa, and defenses personally commanded by King Desiderius held fast against Charlemagne's assault. However, the Valley of Aosta was guarded by Desiderius' son, Adelchi, who had been entrusted with a much smaller force. Pushed back by the enemy at Ivrea, Adelchi was forced into a disorderly retreat. Desiderius withdrew to avoid encirclement, and barricaded himself in the ancient fortress of Pavia, while Adelchi withdrew all the way to Verona. Soon, Desiderius capitulated and would spend the rest of his days in a Belgian monastery; Charlemagne was crowned king of Italy in Rome in 774, and Adelchi fled to Costantinople (which in adherence to the principle, "The enemy of my enemy is my friend" saw the Byzantine emperor welcome the deposed Prince now that Charlemagne was claiming the title "King of the Romans").

However Charlemagne had only travelled to Rome; he still had to subjugate the other half of the Italian peninsula. Or did he? Seeing Charlemagne and his army at the gates of Salerno, Duke Arechi of Benevento, a powerful and fiercely loyal vassal of the deposed King of Italy (he had married Desiderius' daughter) came to an agreement with Charlemagne. Sending his son Grimolado as a hostage to Charlemagne's court, he secured the right to continue ruling as Duke in southern Italy; and was even elevated to the rank of Prince.

On the death of his father, Grimolado was allowed to return to Benevento to claim the throne, on the condition that he mint coinage in the name of the Emperor and demolish the fortifications that dotted Southern Italy. On his arrival, Grimolado immediately began strengthening the fortifications at Benevento and Salerno. After having made his intentions clear to the Carolingians, he then constructed a church dedicated to St. Sophia in Benevento; a direct challenge to the Byzantine empire, just in case they were harboring any thoughts of subjugating him. It looked like the Principality of Benevento was independent and planning to stay that way.

The next hundred years would mark the ascent of the Principality; the monuments constructed in Benevento would lead it to be called, "The Second Pavia" (the capital of the previous Kingdom of Italy) while the great wealth of the city of Salerno, which became major mediterranean entrepôt, was coupled with the success of a renowned school of Medicine. Successive aggressions, both by Charlemagne's successor Ludovic and his vassals in Italy were repealed, either by force of arms or diplomacy.

Although invasions by the Byzantine Empire would contest the regions of Calabria and Puglia and dynastic infighting would split the kingdom three ways by the mid 9th century (the Duchy of Benevento, the Duchy of Salerno, and the Republic of Amalfi) Southern Italy was for the most part a much more cohesive political unit than Northern Italy. The Duchies of Salerno and Benevento would be usurped in the eleventh century by Robert Guiscard, Count of Sicily, later elevated to the rank of king. But that's another long story (elaborated on "The Other Norman Conquest" by J.J. Norwich).

Books on the Communal System in Italy:

The Lombard League by Gianluca Raccagni (Oxford University Press, 2010)

and if you'd like a proper textbook:

The Italian City Republics, fourth edition, by Daniel Philip Waley (Routledge, New York, 2010)

I'd like to recommend Episode 069 of the AskHistorians Podcast which (among many other things) discussed how German control of Northern Italy led to independent cities.