Are Sub Directories Possible?

I know it's a confusing heading but could't figure out the proper heading so will explain in more details.

I am providing information about restaurants in different cities and have been creating separate sub domains for each city eg city.mywebsite.com . I somehow have started believing that it would be better if all the cities are bunched together under the main domain - eg www.mywebsite.com/city1 .

I know I can do it as a subfolder /city1 which is something I have tried out. However, the issue of multiple subdomain or subfolders is maintenance becomes a major headache. Also, when I use Akeeba Backup, the back up file for the whole site becomes mammoth!

The question is, can I create one subfolder with only one installation and then create separate categories which will be cities? Something like www.mywebsite.com/eatout/athens/restaurants

The problem that I see with this is Tags and Search. So if a common tag across multiple city is "French" then if a site visitor clicks on it, then he get to see all items tagged as "French" even if these items belong to different cities. The same problem would be search. Flexisearch would autosuggest even if the items belong to different cities.

Is my understanding correct or can I configure tags and search in such a way that it can be made category specific?