When looking for your first job out of college, there are trade-offs associated with being a large city vs. a smaller one. Not knowing where you live, it's hard to give more specific advice, but you'll certainly want to give thought to moving expenses, cost of living, and the job opportunities available.
In a larger city, there are more papers, magazines, publishing companies etc., which means there will be more jobs available. However, there will also be a lot more competition for those jobs. This also means there's a very good chance that you will start at the bottom of the ladder. But that leaves more room for growth and a chance to really learn the ins and outs.
In a smaller city, you have a better chance of a higher entry-level position. Although, this might mean less room for growth, it also allows you to get some credentials to build your portfolio for freelancing.
If you're trying to work as a freelance writer, your location isn't as important as being vigilant with applications. Although, you may have more opportunities for articles in a larger city, such as more people to interview, more locations to report on, restaurants or shows to review, etc. On the other hand, being a freelancer means variable income, so keeping your costs lower by living somewhere less expensive could benefit you.
I should point out that it's very difficult to pay all of your bills through freelance writing straight out of college. As you mentioned, online magazines and writing jobs do make it possible to work from anywhere, but that also means you're competing with writers everywhere. Many of them may have previously worked as staff writers for publications. That's not to say you shouldn't try, but I'd encourage you to think about applying to full-time or part-positions elsewhere to help with finances.
If I were in your position, I'd apply to jobs wherever I could and see what comes back. You may get a job in a large city that's willing to cover some moving expenses, but this isn't always the case. It's also not a bad idea to take a job at a local publication, build your credentials and save money, then try to move elsewhere. Moving is expensive and stressful. If you're looking for your first job and trying to find a place to live, that will be a lot on your plate.
Ultimately, it's a decision to think over and you have to do what feels like it will be the best given your budget, career goals, and where you feel you'll be most happy.