There do exist premodern cities that are a million plus strong. This is especially so if including the areas around the city, such as Cairo which is many ancient cities, now neighborhoods.
But in the context of Europe, which Waterdeep models, the only way to have a sustainable urban population at this magnitude seems to require modernesque (1900s) magitech. If this is the number, the local setting flavor must describe this magitech. Eberron Sharn is a good example of what Waterdeep might look like, and even Sharn is only 500k.
Earlier the thread entertained Waterdeep corresponding Amsterdam (which I love!). Amsterdam TODAY is just shy of one million population. It was roughly 200k during the 1700s. If so, we are describing Waterdeep with futuristic magitech.
Heh, I love technotopias, so I can work with this! This seems to be what "2 million" means.