Crossword Genius

Wonderful place is seat of government (7,4)

Ross

I believe the answer is:

capital city

I'm a little stuck... Click here to teach me more about this clue!

'government' is the definition.
(I know that Capital city is a type of municipal corporation)

'wonderful place is seat' is the wordplay.
I cannot really understand how this works, but
'wonderful' could be 'capital' and 'capital' is found in the answer.
The remaining letters 'city' is a valid word which might be clued in a way I don't understand.
This explanation may well be incorrect...

'of' acts as a link.

Can you help me to learn more?

I've seen this clue in The Mirror.
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