Genauer (literally: "more precisely"1) is a comparative, so you always need something to compare it to or, as it's typically used, a fact that can be specified - either in the same sentence or somewhere in the context.
Taking this into account, your first example makes sense, detailing a specific place in Bavaria:
Ich lebe in Bayern, genauer gesagt in München.
Your second sentence is not wrong grammar-wise, but from a logic point of view it can't stand alone. To make sense we must assume a preceding sentence like (random example):
Ich bin vor einigen Jahren nach Deutschland gezogen. Ich lebe genauer gesagt in München.
1 Other translations / typical phrases for genauer gesagt are for example:
- to be precise
- to be exact