TL;DR: “Sutis” refers to Susa in modern Iran.
Here’s what I think happened. Chapter 8 of the book of Daniel starts as follows. I’ve quoted the Vulgate text as that’s what was available to the author of Mandeville’s Travels.
1. Anno tertio regni Baltassar regis, visio apparuit mihi. Ego Daniel, post id quod videram in principio, 2. vidi in visione mea, cum essem in Susis castro, quod est in Ælam regione: vidi autem in visione esse me super portam Ulai.
1. In the third year of King Belshazzar’s reign, I, Daniel, had a vision, after the one that had already appeared to me. 2. In my vision I saw myself in the citadel of Susa in the province of Elam; in the vision I was beside the Ulai Canal.
Daniel 8:1–2. Vulgate; New International Version.
The author of Mandeville’s Travels seems to have conflated Babylon (the city where Daniel had been taken after the conquest of Jerusalem by Nebuchadnezzar in Daniel chapter 1, and where he saw his visions) with Susa (the city that Daniel saw in the vision in chapter 8), and then, heaping confusion upon confusion, also conflated Babylon with Baghdad:
Celle cite de baldath souloit estre appelee Suchib. nabugonodosor la fonda. et la demouroit saint danyel le prophecte. et la vie il maintes visions diuines. et la fist il les exposicions des songes.
Jean de Mandeville (14th century). Voyages, folio 13r. Bibliothèque nationale de France. Département des Manuscrits. NAF 4515.
þat cytee of Baldak was wont to ben cleped Sutis & Nabogodonozor founded it And þere duelled the holy prophete Daniel & þere he saugh visiounes of heuene & þere he made the exposicioun of dremes.
P. Hamelius, ed. (1819). Mandeville’s Travels, p. 27. London: Early English Text Society.
The conflation of Babylon with Baghdad is understandable, because the two cities are not far apart. And the conflation of Babylon with Susa is something that you might plausibly deduce from the Vulgate’s version of Daniel 8:2. This verse begins “vidi in visione mea, cum essem in Susis castro”, meaning, “I saw in my vision, when/while I was in the fort of Susa” and the obvious interpretation is that Daniel was in Susa when he had the vision, and from this you might deduce that Susa was another name for Babylon.
Some early translations of the Bible into English contain exactly this reading of the verse, for example, in Wycliffe’s Bible (1382), Daniel 8:2 begins:
siy† in my visioun, whanne Y was in the castel of Susis
† siy = then, next, afterwards
and there are similar translations in the Coverdale Bible (1535) and other 16th century bibles based on the Vulgate. Translations based on the Hebrew Masoretic text, by contrast, indicate that it was in the vision that Daniel saw himself in Susa.