I used to answer this question, then about a year ago u/shlin28 wrote this and I resigned myself that I would never ever top it.

What you're interested specifically interested in is discussed in detail here:

The city itself had also changed. Rather than a metropolis, it may instead be seen as ‘a set of what could be called urban villages, maybe as many as a dozen, held together by a common politics and, probably, a continuing ritual of processions across the old classical centre’. It was the church that now bound its inhabitants together, and as a result ecclesiastical visitors continued to stream towards the city, whether as pilgrims or to join its many monastic communities. New churches were also constantly being erected, and our best source for events in Rome, the Book of Pontiffs, repeatedly recorded endless church-building projects by various popes, so we get a sense of the constant hustle and bustle in the city rather than a dreary tale of decline. There were still secular building projects of course, but the sources are generally silent. The one exception is the Column of Phocas, a column dedicated to the emperor Phocas (r.602-610):

This article pretty much sums up how Rome had (d)evolved after the fall of the western empire.

In addition, during a uni-trip to Rome, the professors at the Oslo institute of Rome told us that the most important change was the situation of dwellings. Having previously been near the hills in antiquity, the contrasting Rome of the middle ages was situated on the field of Mars. The field of Mars was prone to flooding and used mostly for religious and civic musterings. Although in the early imperial period, it was used partly as localtions for insulae.

However, the field was still mostly for commerce, civic mustering and religious and cultural events.

After several fires in the city and the sack of Rome, the aqueducts failed, leading to water crisis. This was solved by moving the dwellings to the field where the Tiber and the Vatican were the two closest neighbors. Due to the flooding and squalor, it was infested with disease like most european medieval cities.

Fun fact. due to the flooding, silt rushed over the city, making the first floor a cellar in just a few years' time. That's why it's so far down from the modern street level to what you mostly see in excavations as they are ususally from the early imperial period (Mussolini's fault)