My answer depends, in part, on the answer to the question "Why build A or B?". To increase, "show" or test the value (for SEO/other purposes) of the domain? To build a website just because you have think you "the domain" that will support the project?
Also, what's the competition in either space?
What's your knowledge of either A or B?
What resources (time, money, other) you are prepared to devote to A vs B?
A or B are both interesting enough to feed a future passion.
A is a subset of B really, unless A and B have different focuses. I was wondering if there was an unwritten rule/natural fit towards building city sites or state sites and/or a natural user bias/preference for one?
Both; is an interesting idea. If both sites had the same focus then using the Georgia example it could have sections for Atlanta, Augusta, Columbus, Savannah …Marietta and Smyrna. Would it be a good thing/bad thing to have the bulk of content and data for the dominant Atlanta mainly on the second domain instead?