You have synchronization problems when every hill has it's own fiefdom. You get political deadlock, effective NIMBYism, corruption too small to get sunlight repeated at every hill, and things like making a metro transit system impossible because 60 municipalities can't work together.

Just think about the general issues of a HOA gone bad and how hard it can be to deal with it without great personal cost. That is the problem of micro government in a nutshell.

Scalable government is a hard problem in general.