The European Commission is in fact empowered to boss member states around, it's one of the things that give EU law teeth rather than it being like "international law" (unenforceable anarchy). It also acts much like a government (in the sense of executive, not in the sense of state) when it comes to EU lawmaking, and has various government-like powers in fields like competition law for example. And the European Commission is based in Brussels. Saying "Brussels" to refer to Commission activity is as natural as saying "London", "Downing Street", "the Cabinet Office", "Whitehall" etc to refer to British government functions. And that's without getting into all the other EU institutions that are based there!

It is true that the EU institutions are ultimately subordinate to the member states in a way that, say, the US federal institutions are not, but the EU is still very much is its own thing. It even has legal personality these days: you can sue the EU and the EU can sue you.

It doesn't imply that the EU is one state. It's just the place where the decisions are made. If Brussels didn't like anyone knowing that, I'm sure other cities in the EU would happily take the gobs of free money showered on wherever the EU is headquartered.

I’m not sure you realise that this is a far more generic rhetorical phenomenon that encompasses all kinds of situations. Like referring to the FBI as Quantico.

It's usually used in place of a person/active participant in something.

So ‘Brussels suffered a deadly fire’ will always refer to the city. ‘Brussels decides on new aircraft regulations’ will almost always refer to either the city government, the Belgian government, or the EU Parliament headquartered there. Brussels is just an exceptional case because there is so much based there, as opposed to the Hague or the Vatican.

They might say "The city of Brussels".