Somehow most people living in dense cities make do with a small amount of space. For example it's not uncommon to find 300sq ft apartments in Manhattan. Some people even manage to raise kids in such space. Look at places like Hong Kong and similar where small units are the norm and yet people seem to be able to live with the issues you mention.
It is quite true that you can live happily in small places. However, it doesn't mean it is preferable to do so.
Having lived with my wife in a 490 sq foot jr. one bedroom for one year - and now in a 2 bedroom, ~800 sq foot place, I can say I really don't get the whole minimal housing thing. Our new place is objectively better; aside from price and the most marginal savings in cleaning time, there was no advantage to living in the smaller place.
Improvements:
* It was impossible in old place to fit bikes, TV, and 2 computer stations in living area. So 1 computer station went into bedroom. Causes conflicts if one person is sleeping and other is awake -- moving computer + associated papers/books is an annoyance.
* Dedicated sleeping room. No need to disturb other sleeping person while getting clothes, etc.
* Place to retreat: In a small place, if you just want to be alone, you really can't be. We have lower stress levels with 2 bedrooms.
* Space to move around: We feel healthier having more space to move around.
* Can now actually invite more than just 3 people over at a time.
That said there are limits; we'd gain little from more space. But there's a lot to be said for having at least one bedroom per person.
Are you comparing living without a home to living in a small apartment in a major city?
Given people seemed to raise kids and survive in 983 sq ft during the 1950s (average house size) I don't see why people think we need massive houses to raise children in today.
I have spent extensive time in HK, and I apologize that I have only had the misfortune of interacting with people who make incomes on-par or above that of a typical Silicon Valley worker, thus they have AMAZING places to live....
Unfortunately I am at the poor end of the spectrum at south of 200K USD per annum
