Chicago, is the largest city in Illinois and one of the largest cities in the US.
In "Birth Day", Offred mentions in her inner monologue that "Guardians of the Faithful and American soldiers still fight with tanks in the remains of Chicago", confirming that the Second American Civil War is still ongoing.
In Season 3, the fighting in Chicago has intensified. Gilead has recently ramped-up the deployment of Guardians and ground-level Commanders to the front lines, training many of them at Fort Stevens before transporting them via rail to the city. In "Useful", several Commanders meet and discuss plans for expanding the Fort Stevens training facility to support Chicago's troop surge.
They also discuss plans for conducting mass executions of prisoners (particularly Unwomen) captured in Chicago, as well as a sustained bombing campaign in the city. Commander Lawrence advises against this, and appears to have arranged for many of the women to be sent to the Colonies in lieu of execution, however.
Lawrence also advises against saturation bombing due to the "resources" that could be mined from the city, namely fertile women and children ("Women can be useful").