Many pre-modern nations did not have clearly demarcated borders—especially in places without hard geographical features. In such areas, the exact position of the border (if conceived at all) could fluctuate over time due to dominance (or lack thereof) of, and the ability to maintain, areas contested by bordering polities. Reflecting this, some settings (like Greyhawk, Forgotten Realms, etc.) don't have borders marked on their maps.The original problem example that I cited way back where you have a fewmegacities that wield tremendous clout yet lack so much as the cohesiveness to bother pretending they exist within a nation someone bothers to draw on the map. Having dozens of nations like FR for a RPG is likely too much to differentiate or support in any meaningful fashion because expecting people to read a few decades of FR novels is unrealistic, but wen a setting is known for three or so major cities you keep pointing a spotlight at likewaterdeep daggerford & icewind dale & so forth but can't be bothered to mark out nation borders it's a problem.
The cities of the Sword Coast are like the late medieval Italian city-states, but in a larger, more sparsely populated area. They control their immediate surroundings, but since there is so much area between them and the next polity there isn't much point in having clearly demarcated borders. As they aren't exactly bumping into each other, they aren't competing for land (and most of them exist in the mutually beneficial Lords' Alliance), so they have a lot of room to claim without offending their closet neighbors if they need to expand. Outside of their immediate sphere of control are marches—with autonomous towns, villages, or thorpes or unsettled wilderness.