Lol,
Laron you took the words out of my mouth. Or, rather, out of the mouth of a small, frequent visitor to the house where my children grew up. It was very small by most standards, though somewhat bigger than the one shown above. Since we also had an entire family in it, I'd say our house had proportionatly about the same amount of space (perhaps a bit more). Our little visitor mused that our house was little, some friends near him had what he considered medium sized houses and his house was biggest. His concluded, from observing the way folks interacted, that 'the smaller the house, the more people played together'.
I did find that living in such a small space encouraged going outdoors a lot, interacting with our neighbours frequently and both considering very carefully what we bought because it just wouldn't fit and also encouraged giving away stuff that did accumulate because, again, it just didn't fit.
It didn't seem to work that way for everyone, as some neighbours in the same size places really had trouble with this. However, we did all tend to ask each other about how to manage our small spaces, where we could take out what we were tossing, how to manage our children on rainy days when they needed to get their jiggles out, etc. Overall, I would say that living in the small space tended to make us all aware of how little we need much more than living in bigger spaces and I am really grateful my children got the chance to experience this. It seems to me a big blessing. I would also say that there was a natural tendency to learn how to manage space when living in these small houses and that the trend was that even those who had the most trouble with it initially got increasingly comfortable with it as solutions appeared. And they did appear because we discussed things so naturally.
The 'bigger is better' trend of thinking in so many places I've lived really gives me reason to appreciate the value of a tiny house option. I see it as a great option for many situations.
Rent to buy is another issue entirely. I haven't any experience with it.