You're fine.

The thing is, I don't think every sector is a town. Or more correctly, the bottom sectors wouldn't all need to be towns. Topsides could be cities, but it's also obviously that some sectors are more industrial like Sector 1. There is also Sector 0, which is the Shinra building. I know Midgar is said to have been multiple town before merged together, but it would also make sense that the towns moved upward as the cities industrialized and the old towns were either torn down to make way for industry or became the shanty towns we see in the game.

Narratively speaking, I don't see a point of exploring the other sectors unless you were going to set the whole story in that location. Exploring the rest would have likely just driven home the fact that Midgar sucks, which I feel what is shown already does well. The only advantage of going topside would be to have that Solaris moment from Xenogears, but it wouldn't have been as impactful since the context is completely different. Course if the game had focused purely on the industrial dystopia/environmental terrorism aspect, then it would have been important to explore this, but we all know VII eventually falls into the typical FF Tropes of being a quest for magic rocks.