How do you call the cognitive bias of not seeing self as the common denominator? Imagine an Italian person is living in London. A poll on the street asks them to estimate the total number of Italians in London. This person then gives a highly incorrect, overblown guess. It's simply common for people of a single nationality to notice each other in the crowd or go to the same places, so it's somewhat likely that one would have an inflated estimate in their heads.

Another example would be a "reverse physical attractiveness stereotype": a person holding the belief that "all people are friendly". However in reality this could be explained by the fact that the person holding the belief is highly attractive.

How do you call this bias? Selection bias seems close, but is there something more specific?
While I am not sure if people actually do overestimate the incidence of a minority group (or maybe they do, I would want to see the data), we can treat this as a philosophical question about what we would call that phenomenon were it to exist. 

The notion of bias in psychology is less precisely defined than a similar notion of bias that lives within the fields of computer science, machine learning, and computational cognitive science. This notion of bias is simply the property of an learning algorithm or a cognitive model or a person that cause it to favor some hypotheses or explanations over others in the absence of specific data. For example, if I come across an unknown large animal with big teeth, I may have a bias that causes me to expect it to attack, even though I do not have any direct experience as to whether or not it is friendly. If you think about it, any prediction we make requires such a bias, because we never have data about what has not yet happened. If you are interested in learning more about this, I suggest reading Hume, Tversky and Kahneman, and Mitchell as a start.

I agree that what you are talking about is a bias in this sense, but I do not know whether there is an established term for the specific type of bias. In general, while it is useful for exams and for reference, I recommend avoiding leaning too hard on the idea that all phenomena fit neatly into well-defined and labeled concepts such as "selection bias" or "reverse physical attractiveness stereotype." While some people might have a term for the phenomenon you have mentioned, it is more useful to articulate and understand it in terms of what it is: a cognitive tendency to overestimate subpopulations in large cities in the absence of relevant data.

Whether this is a general phenomenon about human estimation or it is limited to cases of subpopulation estimates in large cities is an empirical question. If you want to know more, you'll have to run some experiments!

Edit: Now that I think about it, this sounds like like the availability heuristic discovered by Tversky and Kahneman. Basically, the availability heuristic (or bias) is the conflation of the biased sample that you have easy access to with the full population. In the case of your example, an Italian person living in an Italian community would likely run into a lot of Italians day-to-day and therefore might come to believe that Italians are prevalent in the total population, even though this incidence of seeing Italians is solely due to his membership in this particular community.