I also want to address that the Upper City being a scrapped thing seems to be kind of an urban legend, and I've seen certain things attached to it being spread as truth that are completely untrue (most notably, that this is where Karlach would be fixed and that the current game just defaults to her bad ending)
Act 3 is very much rushed and feels incomplete, but when Swen talked about the Upper City, he meant the ruined parts we see in the final battle, and just didn't want to spoil that that's where it'd be happening. This was clarified both by Larian early on when they addressed some of the backlash over what fans perceived as cut content, and by Swen later on during an interview, where he and another employee (Adam Smith, I think?) quickly corrected an interviewer who affirmed that the Upper City had been scrapped. I imagine some could think that they're just covering the truth up, I suppose, but the timeline of them talking about the Upper City in July only for it to be "nowhere to be seen" in August is too incredible for them not to be telling the truth. That is an insanely small time period to do a content chop of that caliber.
Swen said the cut content with Karlach in the upper city was untrue, which I believe because the trajectory of her story always seemed to be leading up to her scene on the docks, coming to terms with
death
etc.
As far as I know there hasn't been any clear answer for why they were talking about being able to explore the upper city very close to release. This was on their steam page in July:
"many of these locations are back, and many news ones are waiting to be discovered for the first time - giving you a chance to explore the menacing roads of the Outer City, the opulent estates of the Upper City, and the dark alleys and pubs of the Lower City."
Swen also mentioned being able to explore the upper city in a video published close to the game's release.
There's always going to be cut content in games but I think the upper city was cut very close to release and that's why so much of the third act feels clunky.
I don't think they're "lying" about it never being there because they haven't given a clear explanation for it. It was also abruptly announced that the game would be released a month early on PC, but not PS5. So I don't know what happened, but I think there are indications in Larian's comments, the moved up release, and within the game itself that the upper city was cut and quest locations moved around. For example Silfy, one of the tiefling children, mentions that Mol is behind the gates of the upper city. Clearly she is not lol.
Maybe they realized it would take too much time for consoles to be able to handle it? I don't know.
