Here’s a quick opinion.
I love tiny homes. My one-bedroom apartment has a relatively huge living area – enough rom for a second bedroom – and the frugal me thinks it should be smaller. And the trend is definitely towards owning less stuff, so less space is required. Smaller homes are better for the environment, and you need less land / materials so it is much cheaper as well. All of this is known, and it feels like win-win-win.
HOWEVER! A century ago almost all of us lived in tiny homes, at least substantially smaller than today. What has changed is society has collectively become wealthier, and we have a distinct preference for larger homes. Even though they cost more to build, maintain and keep warm/cool, we choose them. That is why homes have never been bigger.
Tiny homes are a fad, and for some people they will be a long-term way of living. Just like some people become hermits and camp in the forest. But for most people, if they aren’t concerned about the embarrassment, tiny homes won’t stick, and they will switch back. We actually like bigger homes.
BUT! This fad is good, it will cause many of us to question our wants and needs, and the long-term trend should be towards more austerity in home building, and less opulence. In Australia (who recently had the biggest new homes in the world) the fashion of many living areas (including formal dining), should be over real soon, because nobody actually uses a formal dining room, it is a dust collector.