Besides their city palaces, sometimes kings, emperors and other rulers had a second seat of power, typically summer palaces. This was true in places as different as Vienna, where the emperor moved from the Hofburg Palace to Schönbrunn--about five kilometers to the southwest--for the summer, and Beijing, where the Summer Palace is located some eighteen kilometers to the northwest of the Forbidden City.
In some cases, the other palace was in a different city, like the palace in Sintra, where Portuguese kings spent long periods away from the capital, Lisbon, almost thirty kilometers away. And that is also the case of Potsdam, Berlin's "other city".
Since Frederick William, "The Great Elector", chose the Potsdam as his hunting retreat in 1660, the city became something of an alternate reality away from Berlin. After Frederick the Great built Sanssouci (French for "without worries", you get the point) in the mid-1750s, the Potsdam palace remained a favorite retreat for Prussian kings and German Kaisers.
If WWI marked the end of that tradition, a new place of fantasies arose right away in nearby Babelsberg, the site of the then-powerful German film industry. You could even say that the physical location for the "Metropolis" of Fritz Lang's film was, literally, in Potsdam, at the Babelsberg UFA studios.
And then there is the Potsdam Conference (even if the oficial documents refer to it as the Berlin Conference.) While Berlin laid in ruins in the summer of 1945, the leaders of the victorious Allied powers of WWII met thirty kilometers down the Havel, in the bucolic calm of Potsdam's Cecilienhof Palace, to decide the future of Germany and, not much of an exaggeration really, the future of the world for the following decades.
(The image above is a sketch for Sanssouci from Frederick the Great's own hand.)