I don't know what evidence you have about people not living above one another. We've been doing it for thousands of years at this point.

I personally think the best places I've ever lived were areas where the housing stock is primarily three flats. You still have a lot of space, and you can find space to be alone when you want to be. The density enables a lot of amenities within walking distance, as well as making casually meeting neighbors easy. More densely populated neighborhoods have the lack of space you describe.

I moved to an area with a similar lot size, but all the houses are single family. It's borderline unwalkable, and it's still much more densely populated than the average suburb. The suburbs I think are the worst density imaginable. You are still close enough to other people to annoy one another, but not close enough to interact in a humanizing way. Most of your interactions will be only when someone intrudes into your bubble in some way.

I think there are a lot of benefits once you get up to a more rural density. You can have a shop, you have fresh air, and nature, etc.

The midpoint where you aren't stacked is the worst in my mind though.