Tu ciudad es más conservadora que la nuestra, mientras que la suya es menos tradicional.

Questions & Answers about Tu ciudad es más conservadora que la nuestra, mientras que la suya es menos tradicional.

Why is the indicative verb es used after mientras que instead of the subjunctive?
In this sentence, mientras que is used to contrast two established facts, meaning 'whereas' or 'while on the other hand'. Because you are stating facts rather than talking about a future or hypothetical condition, it requires the indicative mood (es).
Could I just use mientras here instead of mientras que?
You really need mientras que here. Mientras by itself usually refers to time, meaning two actions are happening simultaneously. Mientras que is used to contrast two different qualities or situations, which perfectly fits this comparison between the two cities.
Why do we say la nuestra and la suya with the article la included?
The phrases la nuestra (ours) and la suya (theirs) are possessive pronouns replacing the noun ciudad. You must include the definite article (la, matching the feminine noun ciudad) so they can stand alone as pronouns. If you dropped the la, they would act as adjectives and would need a noun placed directly next to them.
Since la suya can mean his, hers, yours (formal), or theirs, how would we clarify it if the context was not obvious?
You are right that la suya is ambiguous out of context. If it were not already clear from the conversation that you were talking about their city, you could replace la suya with la de ellos or la de ellas to be perfectly specific.

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