I see what Al's getting at, but Snowguy is right as well. A nation is a larger collection of cities, and states, and provinces, just like a city is a larger collection of houses and businesses.
Ah, you have to be an American to be able to use the word "nation" is such a free sense 
But even in a physical sense a city is more than just a collection of buildings; it has an actual physical existence all of its own. For one thing, they grow. And their growth can be observed;
Yeeeeeeesssss... but even so border areas will often have more in common with the area on the other side of the border than with the rest of the country that they're in.
This is a thread about America... and yes, we can throw the word "nation" around... because we refer to ourselves as a nation. We are not bound to the confusing political history of words like you Brits are... hence things like public schools actually being private and liberals actually being conservative.
My point is that there is not enough of a difference between a city and a state or country for it to be silly to be proud of one thing and not proud of another.
Being proud because your'e from Minneapolis where 3M is headquartered which invented Scotch tape and the Post It note is not all that different from being proud because you're from Minnesota, where 3M is headquartered....
Americans can be proud that their country invented post it notes... but so can Minnesotans, and so can Minneapolitans.
You cannot, however, be proud as a Minneapolitan, for the invention of Spam, which is actually made in Austin... but despite having been made in Austin, it is still an icon in Minnesotan culture.
As to states have physical existence like a city, you're taking a decidedly European view of it. In America, city boundaries change whenever it is politically prudent to do so. Cities like Omaha, Nebraska have ballooned in size geographically because it makes it easier for infrastructure and management purposes.
Nearly all of our cities are planned and the way cities grow is almost completely a political decision as certain areas are zoned for Industrial, commercial, or residential purposes.
This is the same way a state works. While states are no longer growing or shrinking, it wasn't all that long ago that they were and these were all political decisions as well. Where the capital was located in a state was not always determined by it being the most prominent or populous city at the time.. many state capitals are in the middle of the state as to make the city equally accessible from all areas within that state.
It's a completely different system here... so might you just think for a second that we find it odd *not* to be proud of your state or country....
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