A Title Much Cooler Than Anything on the Old Site
The real world didn't have terrible monsters controlling urban sprawl.It's not the city-states itself that I have a problem with. I should have clarified that I meant city-states surrounded by vast, unclaimed wilderness. I don't know if the Italian city-states claimed area bordering on each other (though I'd guess so), but they definitely didn't have vast wilderness.
The areas of Faerun I'm talking about are huge and the spaces in-between are very much unclaimed except by isolated villages, so I'm not sure if the analogy holds. On the other hand, Greyhawk's territory (and I understand Gygax was inspired by the American Old West) includes a lot of wilderness area too, it's just that it all lies within the border of some nation's claims (and some of it is at least occasionally patrolled), unlike in the Forgotten Realms, where the land is implausibly left for monsters to inhabit.
Also, like the real life, the "wilderness" was often "inhabited by folk that are not us." Many of the wilderness areas are inhabited by large numbers of sentient beings. They just don't get on well with human, elves, dwarves, etc.
Also, what would the world look like with multiple species of intelligent peoples who can't interbreed? They may need to be agreed-upon buffers to keep the peace.
But, mostly, D&D is a dangerous place. It's hard for folk to clear out the monsters and keep new ones from moving in, while at the same time dealing with other "civilized" populations with competing interests.