I don't think city is the right term here. Most places are really just glorified villages, and the reason for that is probably a combination of technology and restraint.
In Skyrim, everybody has a house or inn where they sleep and live. There really aren't any nameless, filler NPCs in cities. Providing an actual city with hundreds of residents would be a monumental task. Not only that, but the city would take up a sizeable chunk of land mass, and you'd have to load new areas all the time. (Kind of like the Oblivion city to a much larger scale.)
I just consider Skyrim to be condensed adventuring. The land is smaller, time passes faster, technology hasn't changed in 200 years, and towns are only filled with relevant people.