It's actually better to not make cities due to the increase in lag. A central location that has portals going to different locations is better imo.

The server that I was apart of had our initial village and then later after exploring we had an off shore island that was kinda a city with a central fort/hub. Both areas were rather quite laggy which I didn't find enjoyable.

Luckily on the 2nd area I built my own area on a tiny spit of land within swimming distance from the island resulting in zero lag.

Eventually someone made a portal hub on top of a mountain and incorporated an ice cave as well. Kinda like a Greek amphitheater look to it.