I've never understood the argument about small towns being worse for urbanism.
Back in the day, before cars were widespread, everything had to be close by.
You don't even have to sacrifice the backyard for that, you can have a city layout that puts the houses themselves fairly close to each other, and the yards can radiate outwards. Then you connect each cluster's main street with the other ones, but unlike suburbs, you make each "subdivision" mixed-use and you allow public transit , pedestrians and cyclists to cut across subdivisions for easy access everywhere.
If anything, small towns should be urbanism done right, because they don't (shouldn't?) have the money for sprawl and they don't have all the pressures for increasing density a lot, that big cities have.
Indeed, and there are small businesses mixed in with the houses. But the problem is cars (it's always cars). A coffee shop next to your house is fine - a delight even - when 20 people arrive by walking or biking. When it's 20 cars though it's misery.
