Space stations actually become easier the bigger they are.
Micro meteorits are less of a problem if you have tons of metal (or water) around you anyways.
Recycling stuff and producing food/air becomes less error prone if you can do it in REALLY large scale and redundantly so.
Artificial gravity through rotation becomes less irritating (different gravity for your feet then for your head) the bigger your station is.
If you can have some thousand of your inhabitants go out and fetch resources, then even extending your space station becomes easier.
What's probably really problematic though, is keeping your people civilized and preventing fires.
And then there's the "tiny" point of how to get something on that scale actually started - it's not like you could move a billion people into space right now (or even over the next some hundred years).