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There's some small cities in the game you can't visit. When you check them out, they have the same color and stock ratios as their nation's capital (Lowee, Laststation etc.). So far there's Sim City,Haneda City, Randome City and Lagoon City.

Do these small towns actually do anything or are they just to populate the map?

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The purpose of small cities is to be another place for shares to be distributed besides each capital. Each nation has two small cities that are associated to it, eventually. Basically, each city will primarily have quests that draw from Arfoire and give to the associated nation, and then possibly quests to shuffle from a different nation to-or-from the associated nation. They're essential for manipulating global share counts.

You can't actually visit them or anything.

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