Okay, kiddo, imagine there is a city on top of a big hill. This city is supposed to be really good, kind of like a model for other cities to follow. It's supposed to be an example of how to live in a really great way.
The idea of a city upon a hill comes from American history, specifically a speech by John Winthrop in 1630. He was talking about a new colony in Massachusetts and said that they wanted to create a city on a hill, which meant they wanted to create an example of good living for others to follow.
So when people talk about a "city upon a hill" today, they're talking about an ideal or a goal to strive for. They're saying that they want to create a place that's really great and worth emulating, just like that city on top of a hill was supposed to be.