"İstanbul Türkiye'deki en büyük şehir."
Translation:Istanbul is the biggest city in Turkey.
I think I see what you're saying... It seems you're interpreting it as "The Istanbul that is in Turkey is the biggest city." However, that would need "Türkiye'deki" in front of "Istanbul": Türkiye'deki Istanbul en büyük şehir."
The word with the 'ki' suffix works as an adjective, so it comes before the thing it is modifying ("en büyük şehir"). In Duo's sentence there is still only one Istanbul: "Istanbul is the biggest city that is in Turkey." :-)