I would say that you want to have a sort of reverse-donut shape for the detail-level of your campaign: Lots of detail at the top levels, lots of detail about the areas surrounding the players, and not as much in between.
Think about how the information will be used by the players. Obviously the lowest-level stuff (inside-out) is vitally important... That's what the players are experiencing now. The high level stuff is important too: when a player thinks about the world they're in, they'll be looking for a high-level overview (outside-in).
The stuff in between (the districts in your example), just isn't very important most of the time. There will be a few that are (locations of natural wonders, or important characters). There will be a few that the players need to interact with. Everything else can wait until they're needed.
Leaving this middle-tier somewhat hazy has the added advantage of allowing you room to improvise. If you need a town, you can add it to the blank areas of the map. The same for a forest, or a river, or a lake, or anything else your campaign requires. Role playing campaigns are much more fluid than most other forms of fiction, and having the extra room to improvise can be extremely helpful.
The Government has no time for small fries like you
Technocracy appears to be a monolithic Big Brother, spying on everyone at all times, but the truth is that their goals can leave even the best among them strained. Even the most oppressive governments are loath to devote precious resources (people, equipment, processor time) to small threats. In fact, such a government would rather apply pressure by threatening the well-being of a dissident (withhold important documents, make it hard to find a job, have a person known as an anarchist) rather than actually doing something drastic (investigations, summons, lawsuits, arrests).
The most oppressive way to threaten is to keep someone in the dark. The System has to be impenetrable and capable of anything. Your players seem to misunderstand and think that the System will play by the rules. It will not - it makes the rules instead. Laws, police force and courts are for regular criminals, who need to be stopped. Your characters however are more than that - they are dissidents, stark enemies of the System. A smart System operative would exploit their situation in three ways.
There are things you want from the government
Like a passport maybe, a place at a public kindergarten, driving license. Or maybe you'd like the police to properly assist you when you're mugged by "random" criminals? Or actual, dependable healthcare, without risks of complications? Or maybe sick pay or a pension? There is a lot of stuff that the government actually provides (at least in the EU) and your PCs will need those from time to time. Actual bureaucracy, delays, not being taken seriously. Hardly anything will demoralise a person more than reporting an assault (or other crime) and hearing "Are you sure you didn't provoke them? I mean, look at you. Who goes out that late anyway?". And then the case gets closed under "perpetrators unidentifiable" bull.
You have something to lose
As you said, there are families, posessions, freedoms. These can be taken away or better yet, threatened to be taken away. Democratic societes take a lot of stuff for granted - right to work, right to travel, right to gather. Imagine that a PC want to go to Spain for vacations, but every time he passes the border he is labeled for extra checks that make him miss the flight. PC's family can go, but not the PC. Maybe the boss will one day approach him and say that there are redundancies and sorry but he has to go. Don't do that to the players just yet! Mention that a friendly NPC has those troubles and make the NPC no longer willing to help.
There are things you want to hide
You said the characters committed some crimes. Lucky for them! They get to walk scot-free. Maybe a routine hearing that goes terribly, maybe a day in the jail, but afterwards, with no explanation they hear they're free to go. Let those accumulate, it's perfect blackmail material. When they go against the government in a serious way, a skilled operative will give send them a court summon. This can of course go away, but if and only if the characters cease all unwanted activity. And if they turn their contacts in, they might even get rewarded...
Usually, a single government operative would control about twenty cases at any given time, with many more than that being monitored. These people are often masters of coercion and can achieve compliance in a number of cost-effective ways. If the target is showing no signs of improvement, they would start building a net of contacts, helpers, snitches and spies around that person. In the end, however, it's control what they want, not termination. Especially Technocracy is much more fond of reprogramming and repurposing Mages into their ranks, either by invitation or by force than terminating them outright - that's considered inefficient.
In Mage Ascension such people would be known as Men In Black. They would indeed concern themselves mostly with Reality Deviants (Mages) and other undesirables (vampires, weres...) Now, what I wrote is what happens before they catch on that PCs are Awakened. What they do after is a topic for a different question.
The above is written partly from experience, partly from real life. IF you would like to know more about specific techniques, read up on the Secret Police in the Eastern Bloc and how they operated during the Cold War. It's a plethora of information and exactly what you need for evoking a totalitarian, oppressive state spewing propaganda, by showing it's dirty underbelly.
Best Answer
It’s all about Agency
As long as the party is independent to choose their path, and their actions remain relevant, having mighty NPC’s involved won’t detract from the game.
NPC’s that are already in conflict have a great excuse for not “doing the thing.”
Suppose the mighty NPC heroes need to recover an item from the Chapel of Nice Things, but the evil dragon circles above to prevent entrance. Enter the lowly PC’s. When the mighty NPC’s distract the dragon by the front door, the PC’s can sneak in through the secret way — they just have to deal with whatever (appropriately challenging) monsters are squatting there.
The players will get to act independently, and what they do really matters. Sidelining avoided.
Avoid direct orders
If the party ends up being part of a wider struggle, especially a military one, it would seem to make sense for the party to have a “commanding officer,” which would be problematic if it takes away the power of the party to choose their path. Strategies to solve this include giving the party a superior who:
Once the party has sufficient reputation, they can be treated like (or become) military special forces, or special agents, who have broad power to act with little supervision.
Say the party is helping to defend a city from attack. Instead of just assigning a stretch of wall to them and throwing monsters at them, they might be held in reserve, or simply never receive an assignment in the chaos. When the assault comes, give the party more than one option — they might want to help the mighty NPC’s at the main gate, or rescue the levy troops at a breach in the wall as the lower city, etc.
NPC’s get to do things too
The above devices will get you a long way; however, if only the PC’s get to affect the story, the events will start to seem contrived. Let the mighty NPC’s be involved with events that impact the game world, apart from the PC’s. For example, while the PC’s were questing, the city fell, but the king and his guard held back the onslaught, allowing the populace to flee to safety.
Don’t make the party “mow your lawn”
One other pitfall to avoid is making the PC’s into “little helpers” for furthering along your mighty NPC’s heroics.
Since you want your players to like your NPC’s, be careful that your quest hooks don’t sound like: “I hate to ask, but could you clear out my cellar? Oozes got in again. I’d do it myself, but there’s this Celestial War thing and apparently they can’t start without me. Oh, and feel free to help yourself to any of the junk you find down there.”
An inglorious plot hook isn’t always bad. They can inculcate comraderie in a new party via a little shared suffering. But if you are going to be spending any significant time telling an ongoing story, then your PC’s should be involved in a meaningful way.
If the party is not ready to play a meaningful role in a particular story, don’t make the game be about that story. (A little tantalizing foreshadowing is OK.)
Mighty NPC’s can provide aid in ways that are fun and interesting
Having high level NPC’s give you options changing up game play for low-level characters. A powerful mage might polymorph willing PC’s, provide a powerful item with limited uses, send them to a different plane (or just somewhere far away) or give them magical/technological protection against certain enemies.