Dream Zanarkand was not permanently destroyed by that attack; in the story, the city is a summoned dream sustained by the fayth, so it can be re- created as long as the summoning continues. The attack at the start of the game mainly serves to pull Tidus out of Dream Zanarkand and into Spira, rather than erase the whole city for good.

What likely happened

  • The visible damage from Sin’s attack was temporary, because Dream Zanarkand is continuously being summoned rather than existing as an ordinary physical city.
  • The people and structures in it are part of that dream construct, so the city can effectively “reset” as the summoning persists.
  • Tidus only stops existing later, after Yu Yevon and Sin are destroyed, which ends the summoning that sustained Dream Zanarkand.

Story meaning

The opening attack is less about mass destruction and more about transition : it removes Tidus from the dream and launches the main story. In other words, Dream Zanarkand keeps going after the attack, until the events near the end of the game cut off the source that was maintaining it.

TL;DR: Sin’s opening attack did not “wipe out” Dream Zanarkand forever; it was a temporary disruption in a place that exists as a summoned dream, and the city only truly ends when the summoning itself ends.