This Condition located on the Address category tab in Search Builder will let you find people based on the city in which they live. You can select Starts With and enter just the first few letters of the name of the city, or Equals and enter the entire name of the city. There are other options as well. This searches for the Preferred Address.
If your church is in a larger city and you have attenders from smaller towns around you, you might want to find members living in a specific city/town who is not enrolled in a community/life group. Then you can invite them to join a group that meets in their area.