Actually, Hiroshima was not attacked before because it wasn’t a city vital to the Japanese war effort, not because we were saving it to demonstrate the power of the bomb.
However, it was later chosen as a bomb target because it was still relatively untouched and could demonstrate the power of the bomb.
The U.S. didn’t want to invade the main island of Japan. The bomb was a bluff. We were trying to convince the Japanese we could completely destroy Japan without landing on it, and therefore, they had to surrender, but we really didn’t have that many atomic bombs. if the Japanese didn’t surrender after Nagasaki, the U.S. would have been out of atomic weapons, and would have been forced to invade the main islands of Japan.
Dresden may have been the original city mentioned in this, but Dresden wasn’t bomb previously because it was not vital to the war effort and because it was too far from the British and American bases to bomb. Bombing a city required a cost/benefit analysis. Bombers would be attacked by German planes and artillery, so you simply didn’t attack a city unless it was worth the cost.
Later in the war, the cost of bombing cities for the allies was less, and secondary targets could be hit. Dresden was a rail hub, and one of the few functioning rail hubs still around in Germany. So the benefit of bombing Dresden increased because it would keep Germans from shuffling troops between East and West, and the cost was lower because German defenses were weaker too.
The question is why the saturation bombing. The bombs themselves caused minor damage compared to the firestorm that was created by the density of the bombing. Several military targets near the city were not hit, and roads that lead around the city through the suburbs were not destroyed. Why not do less saturation bombing and bomb other military targets. That’s the real question.
The possible answers vary. By causing a firestorm, it became impossible for the Germans to rebuild the railroads and the marshaling yards. There may have been a need to make sure that the marshaling yard was completely destroyed, so more bombs were dropped than needed, and the firestorm was not necessarily was the result of the plan. Some claim the result was to hurt German moral, but such a step could have also backfired. The Germans were considering abandoning the Geneva convention as a result of this bombing.