Oh, I absolutely agree with building more housing (and office and retail space, etc) and less roads and parking in the city. But that does not eliminate the commute. You have to live in a really small town and/or be very lucky with jobs to not have a noticeable commute. Of course, if you can do that commute on foot, bike or public transit that's better for everyone.
Not EVERYONE would have to live in the city. A lot are interested, and would move there themselves, and this would cut down on traffic significantly.