See my bit elsewhere in this thread about Japan - small slow streets need less or even no use segregation. Part of the equation is that small streets discourage fast driving, but also when walking/biking on those small streets becomes the 'new normal', drivers will tend to be extra cautious, expecting slow bikes or walkers anywhere
Through-traffic should be invisible (underground).
Local traffic should be mostly segregated from foot traffic. If there's a block, the "front" of things should be entirely pedestrian / bike with vehicle access in the rear (the alley - but likely larger in this case).