Apparently the Federation's nearest neighbors and antagonists are all evenly matched. That is to say, Starfleet is strong enough where it needs to be to keep the Klingons (when they were enemies), the Romulans, and the Cardassians at bay. Not to mention the fact that we don't really know the strengths or typical dispositions of the Klingon, Romulan or Cardassian fleets. Why should the Feds keep a large contingent of their starships close to home, when keeping them "out there" seems to work for them? If there are any dangerous foes to be dealt with, a starship on the frontier is a better warning system and possibly a better deterrent than any large force stuck close to home.
In sum, the Federation's continued existence suggests their strategy with regards to Starfleet's deployment is the correct one.