Because the larger the population, the more coordination of resources is required. A tiered government structure is the most efficient way to do this. Logistics for a city are very different than logistics for a continent.

And this was before globalization/industrialization too. What worked for societies thousands of years ago isn't a good indicator of what would work now.

But ultimately humans are the problem. The larger the population, the easier it is for bad actors to create positions of power.