Many stories prefer a big city because it's exciting. But sometimes a story instead needs a small town setting, where people know each other, and "time slows down to a crawl". Of course, size is relative, and a small town can be anywhere from tens of thousands, to a few hundred, depending on your perspective.
A good example in fiction: In The Wheel of Time series, the heroes come from Emonds Field, which is a small town of a few hundred people. They get to a city (regional capital) and are all amazed at the size: thousands of people! Then they go to the capital city, and discover that "big city" they were so impressed by is considered a small town, and that nobody has even heard of Emonds Field.
There are a lot of specialized subtropes of the small town:
- Adventure Towns are often small
- Arcadia can contain really low level population towns
- Clean Up the Town
- Company Town: Usually fairly small, as the town's entire purpose is just to support one company's work.
- A Close-Knit Community is often a small town.
- Down on the Farm can also contain them.
- Dying Town
- Everyone Went to School Together
- Everytown, America
- Flyover Country and the Deep South are famous for these
- I Own This Town
- Lovecraft Country might contain these
- As might a work in a Southern Gothic setting
- Nothing Exciting Ever Happens Here
- Only Shop in Town occurs most commonly with small towns.
- Quirky Town
- Small Town Boredom
- The Town with a Dark Secret is usually small as it's easier to keep a secret if only a small number of people are in on it.