And why the fuck would so many gods and demi-gods care about this single city? That feels like these movies where it's all about New-York and nothing else matters.

The question is also about what you want at this point: do you want finely crafted tactical encounters? Or do you want to play demi-gods bringing chaos on the mortal worlds?

Another way to put it is what's the point of tier3 and 4 if you want the same things than tier2 but with bigger numbers?

The universe of dnd has unbounded magic. Myrkul, Baine and Bhaal were mortals who went to a god and took its power. It's hard to account for something like that in an openworld.

Divinity original sin 2 did exactly this, but then 2 things are different : the story was about this right from the start, and the universe doesn't have the kind of magic dnd has.

Finally I think larian talked about it, and they didn't say it was impossible, but that it was a different beast to tackle. They probably would have needed much more time and budget for higher tiers. And probably a different story.