My current GURPS campaign is GURPS Dungeon Fantasy. I set it in a fairly vague campaign world, with little defined outside of the dungeon. All the major action takes place in a very small area that's defined by a base, a big dungeon, and some rough outlines of the area around it.
Someone recently wondered about the experience of running that kind of campaign.
Here is what I've learned.
It's very freeing for the GM. Having one main dungeon that the PCs can go to automatically makes for a much smaller, and thus less detail-requiring, sandbox. You can concentrate on making that one location come alive and make it matter and make it fun, instead of having to do that for everywhere. For a GM without unlimited time, this is really excellent. You can just keep plugging away at the dungeon, knowing a good portion of the play time will be repeat visits to the same location.
Further, the vaguely defined city means you can decide on the fly if something is there or not. It's also repeatedly visited, so anything you define or decide to add is automatically useful and will be used and re-used. And if the players miss that feature, they won't move on.
It's very freeing for the players. People want the freedom of a sandbox, and the option to go anywhere. But game session to game session, it's nice to just be able to show up and know you're raiding the dungeon. Knowing you could say, no, let's do something else, or exercise your option to explore the outside world - that's important. But it's very freeing for the players to be able to just know that on Sunday you're going into Felltower and the big questions are - what entrance? How deep will we go? Should we fight that monster or disarm that trap, or bypass it?
Being unable to go anywhere at any time - freedom from choice, or really, freedom from being forced to choose, isn't limiting. You can decide to buy a ship and go a-piratin' or whatever, but the base city with its base dungeon is right there if you don't. You always have a default game for the night.
It works well with episodic play. If you end the session in the city and basically force people to run back to base at the end of the game, you can play with a varying pool of players and/or characters. You can let people stay in the dungeon between sessions, but you don't have to, especially if the dungeon is an easy trip from town (mine takes half a day if you march fast, a full day if you take your time and you're being cautious).
A big nearby dungeon means never having to buy rations. Well, not in large quantities, unless you're thinking of a very deep plunge indeed. But in a greater sense, this means supplies aren't a make-or-break decision with time spent calculating man-days of rations and how many tents you need and if the mules have enough fodder for the return trip. Even if it is a certain trip away, it's the same trip, so you can use a pre-set answer for "how long till we get there?" and "how much does it cost to get there and back?"
Think lazy. Seriously, only work on the dungeon.
Weather? My dungeon is at about the same latitude and longitude of my players and I, so I can set the weather by looking outside. Been cold? It's been cold in the game world. That big hurricane? Nasty storm hit the game world. What's it like out? Someone look outside.
My town? I have a rough map. I don't need a detailed map. Detail would fence me in.
New PCs? A quick walk back to town and pick up the new guys, who coincidentally are waiting at the tavern/inn/marketplace/town square/adventure's guild hall and also just happen to know someone in the group.
Need to introduce a strange new race or class or whatever later, but not now? Just add it later, when they show up with a caravan.
Only the details of the dungeon need to be mapped out. That's the only place you need to really worry about. Keep that tight and nailed down, keep it fun and mysterious and worth going to, and your players will happily keep going. It saves you all work, and makes for a nice way to play. Put your work there, and it'll all sort itself out.