My city is small, but I am continuing to progress through the chapters. Currently I have 31 expansions (just bought one in the expansion sale) and am in the first quarter of chapter 6. I am able to do the events just fine but I might have difficulty contributing as much to the FA as I would like. I might put away some of my dwarven settlement buildings and substitute workshops and marble factories.
My approach is different from those who are only looking for Spire and tournament points. Although I do max out the Spire every week and obtain 2500-3000 tournament points, my city has all the features of a full city -- barracks, magic academy, t1, t2, and t3 factories. I have 3 magic residences that I've won in the Spire.
My tournament score could be higher. It's limited by the number of provinces of each type I have opened, which is limited by my chapter and the number of encounters required by event quests. Currently I have 9-12 provinces open of each type. I have made a strategic choice not to complete province encounters unless they satisfy an event quest. (That way I always have cheap scouts and province encounters available for events.)
I can provide some layouts for micro cities if folks are interested, although even my micro cities tend to have a production focus. My layout for a chapter 2 planks/silk city would work fine for a chapter 3 city since t3 resources would not be required. I believe that city is 3x3.