The thought occured to some people (most notably Gerard O'Neill) that if the delta-V cost for traveling up and down a planet's gravity well is so expensive, the expense can be avoided if you simply live in space inside a titanic space station. The classic "L5 Colony" was about 32 km long, and held 10,000 inhabitants. Such a colony could earn its keep by harvesting solar energy or with other more shady revenue streams. A quick Google search on "L5 Colony" will reveal a wealth of details.
And if you stick an engine on the end, you have a Generation Starship
It sounds very utopian, and it is.
Now, in a Rocketpunk future, when space stations are dotted over the entire solar system (or even the entire galaxy), they might start out as being just a tiny habitat functioning as a Transport Nexus. Yes, they may start as glorified airplane terminals, but they can become more than that. Space stations near research sites can become college towns, ones near mining sites can become mining towns. Then along will come people willing to import and sell things to the inhabitants, and suddenly you've got a city. Think about the TV show Babylon 5, about a space station at the intersection of interstellar transport routes between several star nations. Started as an outer space bus terminal, but grew to become a center of trade and diplomacy.
If the space city has its own revenue stream, it can go even further, and become an independent city state or station-republic. At some point they will be growing fast enough to justify investing in the construction of a full sized L5 colony.
But remember what Thucydides said above about devolution. If the space city's revenue stream dries up, the city becomes a slum, or even a ghost town. Especially if the space city is a boomtown, there to supply a fine selection of expensive vices to the local asteroid gold strike or Spaceguard military base. If the strike dries up or the base is relocated, the space city will die and become a ghost town.
Space habitats appear in science fiction in the Mobile Suit Gundam Wing animes, C. J. Cherryh's Alliance-Union novels, Alexis Gilliland's Rosinante trilogy, George Zebrowski's Macrolife, John Varley's Gaea Trilogy, Sir Arthur C. Clarke's Rendezvous with Rama, and the tv series Babylon 5.
One problem is that you cannot make a small O'Neill cylinder as a pilot project to gain the expertise to build a full size one, due to the nausea caused by the Coriolis effect. Your first one has to be full sized.
A space colony is a particularly pure example of a hydraulic state because Air Is Not Free. If citizens make angry the powers-that-be (defined as "the people who control life support), said citizens will suddenly find themselves trying to breath vacuum. Obey or die. The way to avoid this is with massively redundant life support infrastructure, in an attempt to decentralize control. Of course this only means you do not have to obey the space colony boss, just obey the boss of the segment you live in.
In C.J. Cherryh's Alliance-Union universe, none of the interstellar colonies are actually on an extrasolar planet. Instead they are space habitats in orbit around various lifeless planets (with the exception of planet Pell). The glaring unanswered question is if you are not going to be using the extrasolar planets, why did you go to the insane expense of using slower-than-light technology to create space habitats in other stellar systems? It would have been about a million times cheaper to just build the habitats somewhere in our own solar system.
If one is colonizing other stellar systems with slower-than-light starships, mass is at a premium. The expense of delta-Ving every microgram up to insterstellar velocities then braking to a halt means you won't be able to carry much of anything. It requires much lower mass to carry the needs for a colony on a human-habitable planet as compared to carrying the industrial machinery required to construct kilometer-long L5 colonies. In fact, such a colony ship might not even carry full grown colonists.
Naturally if you postulate FTL starships, all bets are off. Then it simply becomes a matter of transport costs.
This may or may not boil down to Space Habitats initially being unique to Terra's solar system.
If the space colony is larger than your average planet it is called a Megastructure. This includes things like Ringworlds and Dyson Swarms.
In space, there ain't no free breathing mix. Any breathable air you consume is either brought along or is manufacturing out of local resources. Neither of which is free, or even inexpensive. Air costs money. If you want to breathe, you have to pay.
With interplanetary tourists, the "air tax" is included in the fee for their tour package. People living in a space station have to pay their periodic air tax or suffer the consequences. This is why a space habitat is a particularly pure example of a hydraulic state. Obey the people who control life support, or you'll find yourself suddenly trying to learn how to breath vacuum.
"Lurker" is a homeless destitute person living on a space station, especially a space colony. The person figures there are opportunities on the colony, they spend most of their money traveling to it, when they can find no jobs the money runs out, so they have no money for a space flight ticket to somewhere else. They then move to anyplace they can find in the station, much like terrestrial homeless live under bridges. The space colony administrators cannot afford to ship the lurkers elsewhere (there are so many of them), so the problem grows. Of course the lurkers are also preyed upon by the criminal underworld.
Michael Hutson pointed out to me that this actually happens in places like Hawaii, which require lots of money to leave. The destitute tend to accumulate in Hawaii since they cannot afford the air fair to leave and go somewhere else. And the Hawaiian government certainly cannot afford to give them free plane tickets.
Roger MacBride Allen has a simple solution, assuming the station controls all transport to the station.
The term was invented by J. Michael Straczynski for his TV series Babylon 5, more accurately he adapted an existing term. In internet forums "lurkers" are people who read the forums but do not make posts or otherwise draw attention to themselves. Straczynski noticed this phenomenon when he was discussion the proposed TV show on GEnie, Compuserve, and Usenet back in the early 1990's. He thought the invisible forum lurkers were a good metaphor for the invisible homeless people on the Babylon 5 space station.
The rules and societal norms on a space habitat are going to be different than here on Terra.
In the Albedo Anthropomorphics universe of Steve Gallacci, one has a cluster of planets colonized by slower-than-light starships (yes, the colonists are furry anthropomorphic animals, but that is beside the point). The planetary cultures that were founded as a consequence have a "shipboard discipline mentality."
Consider, on a spacecraft, if a civilian saw something like an air leak in the hull, and didn't report it to anybody, they would be endangering not only their own life but also the lives of everybody on the colony ship. So that is a crime.
In the United States on the other hand, if a person sees somebody lying injured on the side of the road, and they try to help the injured one, more often than not they wind up being sued by the injured person. Hands off, do not get involved, it is not your problem.
In the Albedo universe, with the shipboard discipline mentality, it is a crime not to try and help somebody who is injured, and there are "Good Samaritan" laws to protect the helpers.
Naturally such a shipboard discipline mentality will rule a society living inside a space habitat, since such a habitat is pretty much a huge spaceship. Even more so, a civilian not bothering to report an air leak on a habitat is endangering many more people than on a spaceship. By several orders of magnitude.
Three-Generation Rule was codified by Ken Burnside. It suggests that space habitats (space stations where people live and raise new generations of children, not commercial or military bases) have an average lifespan of three generations before everybody dies or is forced to evacuate.
You see, unlike living on a habitable planet, there is no air in space. Likewise other life-support requirements that can only be provided by lots of technology. Which must be regularly maintained or it breaks down.
Commercial and military space stations (controlled by exterior corporation or military forces) are much better at keeping up the maintenance than are space habitats (controlled successive generations of lazy people who just live there).
A space habitat is not planet. The air, heat, and the rest of the life support does not occur naturally. It has to be created by technology.
And remember Every gram counts. This technology is not going to be armor-plated. It is going to be made out of foil and wires. The infrastructure of a space colony is fragile.
Which means a troubled young man angry at the space colony's government, somebody like Timothy McVeigh, would be capable of much worse than killing a paltry 168 people. Using the same level of effort they could shatter the entire freaking colony and kill over 140,000.
So a space colony that does not want to die screaming all alone in the night is going to need to take some steps. Among them are preventing angry young men from carrying out such dastardly acts, and helping not becoming so angry in the first place.
A more long-term problem is that of Technological Decline. As Joan Vinge pointed out in THE OUTCASTS OF HEAVEN'S BELT: If a planetary colony falls into barbarism, everybody reverts to a non-technological agrarian society.
If an asteroid civilization falls into barbarism, everybody dies.
It takes lots of technology to run the oxygen system, airlocks, spaceships, hydroponics, nuclear reactors, and other items vital for life in space. No technology, no life. In other words, they are a Hydraulic state.
I hate to, ahem, pop your bubble, but the concept has problems.
Andrew Love notes that if the asteroid is made of stone, once you start to spin it for artificial gravity it will immediately fly into pieces. As he puts it "there are no stone suspension bridges". Stone is heavy and weak, particularly in tension. A 100 meter external radius asteroid made of granite and spun up to 1 gee would put the granite under stresses about twice the expected strength of granite. You will note that Larry Niven specifies a asteroid composed of nickle-iron.
But it gets worse:
As RocketCat has been reminding you every five minutes Every gram counts. So when building a structure you want the sweet spot between the strongest struture and the lowest mass.
Structures are generally build out of compression members (i.e., girders or struts) and tension members (i.e., cables or tendons). On a planet or moon with an appreciable gravity there is a maximum size limit on compression members, since they have to support their own structual weight as well as whatever they are propping up (does not apply in free-fall since it has no weight). Tension members have no such limit, they can theoretically be of any size.
Compression members push, while tension members pull.
Wikipedia says tensegrity is a structural principle based on the use of isolated components in compression inside a net of continuous tension, in such a way that the compressed members do not touch each other and the prestressed tensioned members delineate the system spatially. As you can see from the pictures a tensegrity structure looks like girders floating in the air, captured in a web of cables. Because of the arrangement none of the structural members experiences a bending moment.
Buckminster Fuller allegedly said that a tensegrity structure can be of any size, covering a city or encasing all of Terra. However I have not managed to find a citation yet.
I also did some speculation on using space opera tractor and pressor beams in a tensegrity structure.
Naturally a conventional structure (such as a skyscraper built of girders) tends to collapse if any of the girders break. A tensegrity structure tends to collapse if any of the girders break or if any of the cables snap.
A good low-mass way to prevent cables from failing catastrophically is to use Hoytethers (cables that are elongated Hoytubes). Strengthening a cable by increasing its diameter quickly becomes too expensive in terms of mass. A Hoytether on the other hand is a low mass network of redundant cables that fails gracefully.
A consortium of scientist are working on the SuperBall Bot Planetary Lander which is basically a tensegrity robot. The robot uses a network of cables and struts to roll over terrain, adapting to uneven ground that would trap a conventional wheeled robot.
Currently (2016) a company named Skyframe Research has received $500,000 in second-phase funding from NASA’s Innovative Advanced Concepts program to develop their tensegrity based space habitat design.