There are certainly benefits of small living. We bought our old farmhouse over 3 years ago and converted a small part of it into a 2 bed apartment.
I hadn't thought about how we may have come closer together as a family becuase of it, but tha's a good point you make. I have also benefitted from living with less stuff. And it's much easier/quicker to clean and tidy up.
However we are finally (after the delays of covid) staring the renovations on the rest of the house later this year. With 2 big dogs and two growing boys I am so ready to have more space again.