As others have said, Feral Cities has alot of background on Chicago. In short, bug city refers to a huge insect spirit nest in Chicago that resulted basically in the destruction of Downtown. Ares Firewatch troops went in to try to take them out, and things go so dicey that a nuke was set off in the hive, and buildings were knocked down to create a rubble wall around a "containment zone" that encompassed most of old downtown Chicago. People caught in the CZ got periodic drops of food and supplies, but on the whole were left to survive on their own for years before the authorities finally cut holes in the wall and let survivors out. In addition, a magical virus was released in the CZ to try to kill the bugs, which it helped do, but it also made astral space near the CZ a literal hellscape.
If you pardon the term, Chicago is an absolute shitpit. The CZ is a post apocalypse wasteland, and the nearby sprawl is like a third world barrens. You have to get pretty far into the suburbs to find anywhere that someone with another option would actually live, and even then the security patrols keep a careful eye on the direction of the lake.
