Cairo was a much older city than this, the largest thing west of China, and a key trading center. It also borders the desert, being almost on the Nile Delta. If this city is also on the desert edge near a great deal of fertile land, the population might be much higher.

If magic becomes common, calling it "medieval" is meaningless. But, yes, D&D, so slightly less realism is expected than in, say, Toon. But historically, 10,000 people in one place was a large, not a small, population. There's no need to pump the population up just to make it a "city", in spite of modern sensibilities seeing that more as a sizable town.