The problem is that you can't use public transport for cargo, for disabled people, for luxury rides, etc - there are many more use cases. Another problem is time - the bigger area and the more people your bus line has to serve, the less efficient it is for your customers.
There are better ideas than to minimize space (comfort AND usability) per person. E.g. optimizing your route in a way that you go from point A to point B as directly as possible, utilizing buses and shuttles on the way, taking people that need it. Bus lines are just like this, but fixed to specific pickup points, which would definitely remain existing, but the traffic around it would get optimized as well.
Why? Because with growing population, there are more and more people that need to go individually because of time constraints, comfort requirementa, disability or cargo. My solution supports your approach, just extends it to all vehicles on the road.
Wait what, why not? If anything, public transport is the sole means of transport for many people with disabilities. I'm not going to claim that all public transport is fully accessible to those with physical disabilities, but every new transport project fully accommodates the needs of those with disabilities, and existing ones are gradually retrofitted as they are refurbished and upgraded.
To give you an example in the UK, specifically London;
* All buses and trams are wheelchair accessible, with audio and visual announcements of routes and stops.
* Some parts of the tube network are completely step free. All trains have audio announcements, most also have visual. A map of current accessibility can be seen at [0]. Every time a station is upgraded or refurbished, it is made step-free.
* Many heavy rail stations have step-free access to the platforms, and staff can deploy a ramp to enable wheelchair users to board and alight. At some newer stations, level boarding is available.
So sure, public transport today is not 100% universally accessible to those with physical disabilities, although other disabilities are better catered for. However, in the context of new public transport projects and surface public transport there's no doubt - public transport is much more accessible than other forms of transport and is an absolute lifeline for those who have either temporary or chronic disabilities.
And let me correct you: the majority of disabled people with more serious disabilities sit at home because going outside and getting to the bus stop is too hard for them.
If anything, it's even more convenient than going in person. I'm not spending ages having to drive to the supermarket, trudge round picking up everything, going through the checkout, loading up the car, driving back etc. I can place the order any time, from anywhere and it arrives when I want it to.
A single rail line at 26 trains/hour can carry around 20-25,000 people per hour. A highway traffic line carries about 2,000 cars per hour, or 2,000 people per hour if it's SOV. Personal rapid transit systems have been demonstrated to carry about 7,000 people per hour.
The only way to scale transit to highly dense areas is to minimize the amount of space each person has to themselves. SOV cars are horribly, horribly inefficient uses of space; standing-room-only subway cars are very efficient uses of space.