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The Italian City-States cannot be considered as "nations" a concept that would be not only inconceivable but also incorrect.

The definition of "states" fits them correctly.

Their sovereignty was at the beginning very limited, because they could manage to buy against cold, harsh money only certain economic and a few of political rights from their feudal masters (Bishops, Counts, Barons, Emperors etc.), who were getting more and more indebted by endless conflicts.

Over time they became further more independent, thanks to the disappearance of their masters and the purchase of the remnants economic and political rights from their successors, to whom the City States were anyhow but only formally submitted and had to pay a formal feudal homage, gaining their full Independence and all the rights related to, like coin money, elect their rulers, imposing taxes, declare war etc.

We can therefore say that the City States were actually little sovereign states, in the form described above though, by no way they can be called "nations".

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Q: How was each city-state in Italy a sovereign nation?
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