This is entirely subjective...didn't read through the whole thread so there may be some redundancy. A lot of underrated cities tend to be overshadowed by other more impressive or well-known cities in the region, or within a day's drive from there.
Victoria, British Columbia. Nice picturesque downtown with a harbor and some interesting neighborhoods. Overshadowed by its mainland brethren Vancouver
Indianapolis, Indiana. Lived in the Lafayette, Indiana area for about a year when I was a kid...used to go down to Indianapolis for weekends on occasion. Fun downtown with lots of things to do: excellent Children's Museum, plenty of shopping opportunities both on the street and in indoor retail centers (Circle Center), Pacers and Colts, really a gem in the Midwest and overshadowed by Chicago.
New York City Outer Boroughs. Never understood why tourists don't check out the outer boroughs that often unless they're going to see a Yankees/Mets game. Especially since Brooklyn and Queens offer so many diverse cultural attractions and recreational opportunities. Clearly overshadowed by Manhattan, but all of these boroughs are very much part of the fabric of the city (Staten Island might be an exception though, it always felt like part of Jersey rather than NYC because of its mostly suburban, low-density character and Italian population)
Nuremberg, Germany. Dubious history of course from WWII but they did a nice job of restoring and preserving its historic core especially after the Allied bombings destroyed almost half their city. Very pedestrian-friendly. Overshadowed by Munich to its south.