Keystone City was a holographic simulation of an early 20th century American city, created by the USS Enterprise-D's computer. The city was a metaphorical representation of a key step in the development of an emergent lifeform being created by the Enterprise-D's computer. The hitman described it as the place "where everything begins." Presumably, the city ceased to exist once the new circuit nodes died.
Worf, Deanna Troi, and Data visited Keystone City in 2370 after being kicked off a simulation of the Orient Express because they did not have tickets. The hitman also disembarked at this stop, carrying a special brick which he later placed in a hole in the wall of a building, claiming he was "laying the foundation." This likely meant depressurizing cargo bay five in preparation for the creation of the lifeform. While in Keystone City, Data tried to depolarize the ship's power grid in an attempt to regain control of the ship from the computer, but he was nearly run over by a taxi generated by the computer. (TNG: "Emergence")