According to Walter Christaller's central place theory, smaller cities focus on providing urgent daily needs, while larger cities provide a more diverse array of services.

This indeed is true. It also makes much sense to think about cities like that. When you have a smaller city, the reason why people started grouping up together in the first place was because they wanted t ohave an easier access to the basic necessities. Once these conditions are met, they can fullfill their more diverse needs as well.

Indeed, Christaller remarks such difference between the two sort of cities. One could think this is due to the industrial capacity of each town, with regard to goods and service providing. Otherwise, one of the main differences could be based on the commercial and communicating equipment each city can count on. Nevertheless, one of the factors that determinates the economical activity the most, according to Christaller, is the export/inner market matter.