I don't necessarily think "small" is the way to think about it. Instead if a family lives in a house for decades their priorities / needs change. So, for example, the retired couple who still live in the house with 2 bedrooms for their children when they first bought the house.
Or what about the house that's available and in an ideal location and has all the right things, but it's a one-bedroom with plenty of square feet, but where will the kids sleep?
If you had a modular way of reconstructing the interior of the house, and they redo the walls using inexpensive modular components, all of a sudden maybe now their master bedroom is twice the size it was, or maybe that space becomes a loft / sitting area instead.
Suddenly it makes sense that a family could reasonably expect to live in the same house over long periods of time comfortably, if it suits them, no matter the changing circumstances that life presents them.
EDIT: And make far better use of the space they have over time as circumstances change.