Short answers, pulled from the story.
The Italian city-states were numerous independent territorial entities on the Italian Peninsula that existed from antiquity until the formation of the Kingdom of Italy in the late 19th century. They took many forms, including republics, duchies, communes, and maritime empires. The Republic of Venice, one of the longest-lasting, endured from 697 to 1797.
In places like Britain and France, communes were absorbed into emerging monarchical states. In northern and central Italy, the rugged Alps made sustained imperial invasion difficult, and after 1177 the Holy Roman Empire's authority over northern Italy became nominal in practice. No strong monarchy emerged to swallow the city-states as happened elsewhere.
Trade was the foundation of city-state power. By the 11th century, cities including Venice, Milan, Florence, Genoa, Pisa, and Siena had become large trading metropoles capable of winning independence from their feudal overlords. The per capita income of northern Italy nearly tripled from the 11th century to the 15th century as commerce expanded.
Luca Pacioli helped establish the banking system of the Italian city-states through double-entry bookkeeping. His 27-page treatise on bookkeeping contained the first known published work on the subject and is credited with laying the foundation for double-entry bookkeeping as it is practised today, drawing on the methods of Genoese merchants.
By the 13th century, northern and central Italy had become the most literate society in the world. More than one-third of the male population could read in the vernacular, an unprecedented rate since the decline of the Western Roman Empire, and a small but significant proportion of women could read as well.
Portugal's discovery of new sea routes to Africa and India shifted global trade away from the Mediterranean, undermining the commercial base of the Italian city-states. German and Dutch banks also began taking business from Italian banking houses. Economic power moved from Italy to Portugal in the 16th century, then to the Netherlands in the 17th century, and to the United Kingdom in the 18th century.