This is more "extreme sensory deprivation is bad" rather than "extreme isolation is bad".

There is lots of evidence of extreme social isolation having minimal impact on people's mental stability over long periods. It's not that we need people, it's that we need to be able to form our own narrative. We need to know what we're doing, why and what it's getting us.

Extreme isolation of small groups seems much worse, especially long term where increased rates of social deviance becomes evidenced.