How exactly do those little fella countries work in the 21st century?

I’m talking about countries like Luxembourg, Lichtenstein, and San Marino. I understand the deal with Monaco. But as for those guys?

I’m absolutely baffled about the everyday workings of countries like this. Wouldn’t they be insanely expensive to live in? How do they maintain distinct cultural/linguistic/political identities with so few people? How do resources get produced when the territory is so limited? How do they even have independent economies? What exactly keeps the populations stable?