The difference in city and town in Axolotlia is purely populational, the reason on the map towns are yellow is just to show that they are usually not as important to know as cities.
Mini countries are cities and towns but they have a few distinctions listed on the next slide.
The minimum population for a town is 200, any less and it loses town status, it is then considered a village and won't show up on maps, the vast majority of settlements in Axolotlia are villages or hamlets (199 people or less), which do not show on maps.
The minimum population for a city is currently not important to know (not that i don't yet have one because i haven't reached that point…)