To me it seems like a simple case of supply and demand. Of course, you can't easily increase the supply of historic super-walkable towns, but you could design and create a modern super-walkable town if you wanted to, and had the resources. Could even make it cute, probably, with the right design regulations.
You're right in the sense that the supply can't actually increase, but I have to say that Central + Southern Europe (but Italy in particular) has so many of these kinds of cute, walkable, quiet-but-fun towns that if you want a lovely trip where you're not arse-to-elbow with other tourists you're spoiled for choice.
My experience was that you can easily find ones that are highly walkable, but "no cars in the city whatsoever" only seems to exist for, like, tiny little towns locked by mountains or on an island or something. Which I guess Venice is sort of like that, except that it's not all that tiny. That's what I like about it: it's a good-sized town/city that's super walkable and no cars whatsoever aside from the entrance area where the trains also come in IIRC.
In Venice, you can walk from the train station to the park on the opposite end, it takes close to an hour, you'll not even see any cars during that time and it's all fairly dense and urban. If there are cities that you could say the same of, I'd love to know about them.
Europe is full of historic walkable towns, mostly the smaller / less central ones because capitals and important cities have been heavily changed aftere cars took over. But many still have at least a walkable central part. Last weekend I spent in Banska Stiavnica, a former important mining town in central Slovakia, and that is an example of such a town, as would be the centre of Cordoba in Spain, which was very important and then ceased to be, and so on. So the issue is, I think, more of marketing: the popular walkable destinations are overcrowded, but there are many like it, maybe without all those palaces but still beautiful and much much more quiet.
Can't speak for other countries, but the actual reason why smaller towns have more of their historic heritage intact in Germany is that the larger/more important ones were sadly bombed to bits during WW2. Of course, after the war, the open spaces created by bombardment were used to enable "car-friendly" cities, but that was a secondary effect...
My parents/ancestors small town in Germany wasn't bombed (except a few accidents) but after the war they decide to destroy many of the charming ancient buildings and replace them with 70's style ugly. It still has some character, but you have to look harder.
Yes, more pedestrian and bike friendly, routing the cars away from the center. Some cities in the Netherlands making efforts towards this.
The author (tourist) writes about over-tourism: a challenge is how to turn those new walkable town centers into new tourist destinations to offload current hot spots?
Some places sort of naturally become tourist destinations because of size/importance, but there are other ways.
* Some specific gimmick that the town emphasizes, like Leavenworth, WA in the US has a Bavarian gimmick/theme that draws in a lot of tourists in the winter.
* Resort towns that were invented for that purpose like Cancun in Mexico, or Sunny Beach in Bulgaria. Doesn't have to be beaches either, you could do the same thing for mountains/skiing I'm sure, maybe other forms of outside recreation.
* Having something legal that 'usually' isn't. E.g. Nevada towns in the US with either brothels or, more famously, gambling. Of course it's the whole state where's gambling is legal, but yeah you'll get some towns right on the border where they exist for people in the next state over to easily gamble.
