The population in smaller centres is not enough to have a single club have enough players of quality to compete without sucking all local quality players into that club, which in the summer - winter competition scenario makes for a very one sided winter competition.
And that's if you can get the players to join the club designate in the first place, in an environment where there is often rivalries and history.
Been there, done that, seen it all with Taranaki United, and again with Team Taranaki, although to be fair they played in the same season (winter) which created conflict between club and composite, with clubs wanting to hang on to their best players, especially when a local derby was up.
Bigger the centre, less the issue as you have a bigger player base
One solution is to have a composite side from amalgamated clubs. The issue then arises with getting the clubs on board. The composite is often seen as 'owned' by one of the clubs, which can produce the same issues as above. It takes a good organisation to actually make it work and get everyone in the neighbourhood pulling in the same direction for the benefit of football in the region.
Shame it hasn't worked out for HBU, even if it was partly of their own making.