The higher altitude satellites are better for serving cities because the total bitrate gets averaged over more area - so you can have a hotspot of users in the city as long as there aren't many users in the surrounding ~600km circle.

Cities are spaced ~1200km apart in much of the world.

Well, you are saying that you have a fixed bitrate per beam to divide among all the users in the area. The bigger the area the more users. And once you reach saturation, that's it. Also, if there is a very populate city inside the beam footprint, you are only going to be able to serve to a very limited amount of people in there.