In terms of 4x games, this is a balancing feature between wide empires and tall empires.

Traditionally...

Wide empires are comprised of many smaller cites while tall empires are comprised of fewer but vastly more populated cities.

A tall empire wants buildings that give additional yields per population working a task (farmer, trader, scientist) or a scaling % of a city's yield (as they are huge).

A wide empire wants buildings that give a large flat yields each to be spammed.

Think of it this way, as the game progresses everything costs more Industry/gold/etc to build.

 A small one territory city is not going to have enough tiles/yields to pull together to make something late game at a decent rate. Instead of trying to keep up with industry costs, they will focus transferable yields like money, faith, and science which are summed together. A taller city will be able to manufacture the later game stuff at decent rates, but only so many of each can be made at one time. 

Humankind balances both approaches in a couple ways.

- Mid-game cities can be merged together

- Both tall and wide styles take the same amount of land. The only difference is land allocation.

- Ideologies: Liberty (wide) vs. Authority (tall) event choices allow players to lean either way or switch mid-game. 

Blackjack095 wrote:

Thanks for clarifying the benifits! Still not too sure what the drawbacks are for having huge cities. Is it a resource intake thing? or will big cities be harder to control happiness-wise? I might not have understood the previous comment entirely so I apologize if you answered my question already. 

I've just finished up an extreme example of what your asking about as I literally made the entire OpenDev continent one city.

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As the population in a city increases, the needs to keep everyone happy become untenable. Thus the city in question had deep seeded food and stability issues but was at least very productive.