How and why do tiny countries like Singapore and Monaco exist? Why aren’t they just a part of the larger country surrounding them?
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Depends on the history.
Sometimes it used to be part of a larger empire that collapsed. Other times it used to be a colony. They could also be the result of civil wars, land deals, etc.
In Monaco’s case, it was a gift from some French monarch to Genoa. It used to be French, then they gave it away for some reason. It became a colony, and that colony later became independent.
In Singapore’s case, the British wanted a trade port in the area, so they purchased the area and operated it as a colony. Then Singapore got independence.
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