I think its much much more about layout than square footage.
We have 1300 sq feet for 4, in a house we actually extended to get to the 1300 sq feet (was originally 900), but the layout has everything we wanted and is reasonably future proofed so I think its actually better than most 1500-1800 sq foot houses I've been in.
We have three double bedrooms and a well-designed bathroom upstairs (so, shower cubicle separate to bath rather than over bath: its not huge but that was something I wanted). We could have squeezed an en suite in our bedroom but I really don't like them, and we have a separate shower room in the downstairs toilet so that if we end up in a situation with teenagers being annoying in the mornings we can send them down there. Attic storage space, though not convertible. Almost no hallway: that's the main place we save square feet but its a compromise I'm happy to make, you come straight into the house and the stairs are facing you immediately. However, we have three separate living spaces downstairs: a study/snug inside the door, a decent if slightly narrow 'grown up' living room and then at the back a full width open plan kitchen/diner/playroom with couches and a tv where we currently spend our time (small children). There's a shower room and under stairs utility tucked away too.
Its all designed with lots of storage built in: eg bench seating in dining area has hidden drawers, under the stairs we can fit washer/dryer/coat storage and high shelving plus an extra freezer.
Its much, much easier to manage and maintain than a bigger house. It has everything we need and wanted, but doesn't require us to spend hours hoovering. We have a small front garden that has a decent bike shed and space for one car. When children are bigger, I can imagine we will make some adaptations but certainly it would be easy enough to have child A on a playdate in one room, child B doing homework in another and us sitting in the snug watching Netflix. I think a lot of modern townhouses waste a load of their footage on stairs and hall space and needless en suites. In an ideal world, post-covid, I'd like an extra room, for a home office, so I can see 1500 sq feet being ideal. But really I see so many bigger houses with impractical layouts. Our friends have just renovated a much bigger house and to be honest, I find their kitchen/diner a slightly oversized version of ours and all you really get is extra steps between the dining table and the kitchen, one side of workspace and the other.
Having spent a long time viewing houses and planning a renovation, I am now pretty convinced it is mostly about design and layout and most family homes have tons of wasted space due to either initial bad design or not designing the home for how you really live in it.