Sure people live in apartments and condos and various floorplans associated with "urban living," but much of the housing stock in Philadelphia is made up of 3 story rowhouses (and, in more western parts of the city, giant Victorians), which, except for the tiny "trinities" that are basically stacked one room floors, are usually pretty big. And all but the tiniest trinities are more than enough room for a couple, if not a family. Since they're narrow - 16 feet wide is typical - people unused to seeing that configuration assume there isn't a lot of space inside. They're narrow, but they're sometimes deep, and 3 stories is pretty tall (there are lots of two story blocks, too, and they're a bit smaller obviously).
Anyway, the more general point is that people associate urban living with shoebox 1 bedroom apartments, but you can have big living spaces and quite a bit of population density (and associated neighborhood supported retail) even without that. Setbacks and massive amounts of off-street parking are what prevent the density necessary for pedestrian-friendly urban living. You can still have houses with a lot of living space.