The internet may seem abstract, but it does actually need hardware—hardware that can be damaged by storms like Sandy. As this chart from internet intelligence group Renesys shows, outages happened across the Northeast but were concentrated in New York City. The data comes from BGP, or border gateway protocol, servers that are used to direct internet traffic. You can see the huge jump in outages due to Hurricane Sandy start around 5:00 PM on the 29th, peaking at around 5:00 AM the next morning.
Clearly, New York state, represented by the purple, suffered the most internet loss. Just media wise, Gawker, Huffington Post, Buzzfeed, and National Review have all had server problems during Sandy. Renesys also notes that while outages affect some 60 million people locally, the network troubles can go beyond the five boroughs: "New York City also happens to be a major hub of international telecommunications. As a result of outages there, we've observed Internet traffic shift away from the city as carriers scramble for alternative paths."