Jerusalem is builded as a city that is compact together; rather, Jerusalem that art builded. The primary reference is probably to the compact shape and look of the ancient city, which, as Josephus says, was "one and entire," with no straggling suburbs, shut in on the north by a wall, and on the three other sides both by walls and by deep, rocky valleys.
But the material "compactness" was perhaps taken to symbolize the close internal union of the inhabitants one with another, whereby they were all knit together into one Church and people.