While Classical Greece and Communal Italy are two completely different time periods in two different geographic spaces, there are some communalities in Mediterranean urbanization. I brought that up in a podcast episode about communal Milan here.

Regarding the specifics of Italy, the development of urban-centric political, social, and economic institutions has to do with the characteristics of the peninsula between the basin of the river Po and Rome. You see, it is not a consequence of happenstance that the heartland of Europe's greatest empire, that of Rome, was a peninsula that could support dense urbanization thanks to high agricultural productivity, capped off with navigable rivers and generous coastline helping foster strong internal and external trade links.

So once Roman institutions definitively evaporated with the fall of Theodoric's Ravennate monarchy, the two post-Roman kingdoms of Italy (Lombard and Carolingian) already had an enormous potential for regional instability. With relatively small power bases leading aristocrats could easily challenge the state; while the state, such as it existed, even in times of tranquility could never adequately develop the necessary capacity to affirm itself on the entire peninsula. And let's not forget that Lombard Kingdom in particular never even consolidated nominal control of the entire peninsula, with corridors connecting major areas of urban productivity controlled by the Eastern Empire. Indeed, not only did the wars of Justinian do much more to devastate, depopulate, and destabilize Italy than any sack conducted by the late roman armies and barracks emperors, but the continued byzantine presence on the edges of the peninsula would deepen geographic fragmentation and contribute to the lack of a unitary system of governance and control. So while in the rest of Europe the seeds of nation-states were planted over the course of the post-roman transformation, Italy would be in a state of near-constant division and crisis, principally because it could afford to. It has been argued that crisis would be the defining feature of the Italian political system until the end of the communal period.

Two foreign rulers who would call themselves Emperors, Charlemagne in the eight century, and Otto in the ninth, would take advantage of an Italian leadership so divided it could not muster an effective opposition to a foreign threat. It is telling that there is no Italian counter-equivalent figure comparable to Otto and Charlemagne. Both Charlemagne and Otto faced off against Italian monarchs who were, theoretically, at the height of their power. And both Charlemagne and Otto's Kingdom of Italy would degenerate into regional factionalism and disorganization. I wrote in-detail about the disintegration of the Carolingian kingdom in this answer here, if you're interested. I also wrote about the decentralization of Otto's empire here.

The perseverance of ill-fitting legal and administrative constructs dating to the Roman Empire, revitalized by Italian kings and foreign Emperors alike in order to justify rule both inside and outside of the Italian peninsula, might have contributed to the continued lack of any successful system of administration attuned to the present needs of Italy. However, this Roman heritage and cultural baggage meant that at the local level the peninsula continued to be well-administered. The urban-centric legal holdovers from the Roman period fostered political enfranchisement for property owners, courts upholding rule of law, and as a consequence, upholding the ability to conduct trade and retain prosperity.

The Roman marketplace and courthouse, called Basilica, had also accrued religious functions to create a social, legal, and cultural reference points in the Italian cities, often headed by a religious authority: the local Bishop. Thus landowners converged onto urban bishops asking for arbitration of disputes, merchants asked for privileges in the marketplace, and in a general sense these communities created a system rule by voluntary convergence. This form of government called the "Commune," would recognizably emerge at the start of the 11th century.

But as I mentioned yesterday, while this sort political organization was certainly easier to set up in urban communities, a strict conception of the phrase "City State" can be limiting.

The "Comune" could transcend the geographic space of the city and its hinterland, even surviving its physical destruction (as happened in Milan in the 12th century) or geographic migration (as happened to Venice in the 10th century). The "Comune" could also impose itself with varying degrees of control over satellite communities, or it could itself submit to an outside authority, even accepting submission to a single sufficiently influential or charismatic person (as happened in Verona in the 14th century). But, most importantly, the construct of the "Comune" could itself be called into question, with frequent crises and expulsions of formerly enfranchised parties as the terms of the social contract were modified and renegotiated. The urban context is a vital feature, but it is not the only feature.