When I first came up with the idea for the Yellow City, one of the two centerpieces of my Yoon-Suin setting, I wanted to come up with a nearby "dungeon" setting in which starting players could adventure and get their hands on loot. I decided early on that this should not take the form of an underground sewer system or out-of-town cave network or any of the other stalwarts. I wanted something that I hadn't done before.
So, the Yellow City's "megadungeon" is a part of the city itself: The Old Town. This is an area on the outskirts of the city which once, in ages past, was apparently its seat of government. It is a once-magnificent district of palaces, plazas, temples, towers and monuments, separated from the rest of the city by a moat; but it has long been abandoned and fallen into disrepair, and the jungle has begun to take over. (Indeed, if one moves right the way across to the other side, one finds that the Old Town effectively merges with the forest - all that remains of its huge buildings are mounds covered in vines and creepers and surrounded by mighty trees.) The locals believe it is haunted and there are innumerable stories and rumours about what lies within it and why people stopped living there. It is a lair of jungle creatures, ghosts, and outcasts from the Yellow City too strange, wicked or insane to be tolerated by the rest of society. But there may be ancient treasures hidden in its depths.
There are certain eccentricities of a city dungeon, mainly to do with mapping. The essential idea behind the Old Town is that it is set up into "zones" rather than levels, each being more dangerous than the first in rough correspondence to its distance from the rest of the city. Within each zone are a large number of buildings, which of course are also comprised of individual levels (basements and first, second, third stories, etc.), but these are not necessarily any more dangerous than the rest of the zone. Within this space, streets and alleyways become 'corridors' of a kind, with the occasional wandering hostile roaming through it.
I haven't run any games in the Old Town yet (I intend to run a Yoon-Suin campaign based in the Yellow City on ConstantCon at some point soon, though) but I expect there to be some issues involved with the city dungeon that I'm not anticipating. The ace-in-the-hole, or thorn-in-the-side, or red herring, or whatever, is the 3D element that being open-air brings. Characters will be able to climb trees and also buildings, to get a better look around and escape foes. They'll also be able to enter buildings through windows at upper levels if they want to try to climb. This will, I expect, create some difficulties in making sure everybody knows where they are and what is going on, and might also involve lots of map shuffling on the part of the DM.
What is interesting about a dungeon is that it is a world cut-off from the outside with its own ecology and, to an extent, politics. But what is compelling about a dungeon is that it is fundamentally quite a scary notion: an unknown and unmapped place full of hostile entities, which has no natural light and is very cramped. The aura of claustrophobia is something that I hope to emulate through allusion to some things that are equally scary in their own way: large open spaces apparently empty though not necessarily so, and the eerie feeling of being in a city that is ostensibly devoid of what makes a city a city (people, noise, warmth, food, shelter).