At point is it legitimate for a certain government (state, city, municipal etc) to say a commodity or service (water, utilities etc) should be a right for all of its citizens? And provide the public utility as a monopoly?

Will emerging network states / city states do the same?

creating and destroying; flying cars, roc.camera, july.rocks

Most likely when the citizens demand it, or when investors want the government to cover costs they might normally cover.

Logistically how will it work? Will the network state negotiate with the government that it resides in? 

Will the local government always have leverage over the public utilities of the network state citizens (shut off water, electricity etc) if there is any conflict? Could that be used by the local govt for leverage?

So many questions. I hope there’s enough will power for DAOs to pursue these questions as problems to solve. It’s a reimagining of democratic technologies.

Of course IRL control always has ultimate power because humans are physical beings, but that's not to say a network state couldn't influence IRL.

But in terms of when gov takes monopolistic control of a commodity / service, I'd just follow the economics - the economic needs of the citizens or the capitalist class.