Know what you see references to all the time in previous centuries? Reading aloud as entertainment among family and friends, sometimes even in public places, and even staging little dramas at home. Kids might do the latter still, a bit, but one gets the impression it was much more common then. People didn't stop doing that because they were working more, they stopped because radio was invented.
When there was no radio or gramophone, if you could play the piano tolerably well and sing a little you were, to your social circle, hot shit. Not so much afterward. You could play a pick-up game on the green off town square against a neighboring town and people would show up and watch with enthusiasm. When things were expected to be repaired and a blanket might cost quite a damn bit to buy, being able to sew pretty well or being fairly handy at woodworking was far more valuable than it is now. Mass production has driven the social (and economic) value of both way down.
Direct personal enjoyment wasn't the only thing one could hope to get from all those "leisure" activities.
Oh, your sketches and watercolors? Yeah they're nice I guess. Have you seen Deviantart? Instagram? I follow 200 artists better than you, from around the globe, and most of them aren't even good enough to make any money at it. And so on. Social value approaching zero.
That said, I think there's also room for a new kind of very-local active-not-passive activity to spring up. We already see the beginning of this with mass tourism and the rise of mass-amateur photography thanks to digital cameras and cell phones.
Does anyone really think their picture of the Grand Canyon taken on their iPhone is better than the thousands of professional photos already taken of it? Yet people (me included!) continue to take pictures.
I'm not really sure exactly what form it will take but that kind of "sure but I haven't personally experienced it" take feels like it might re-open the doors that were slammed shut by the kind of mass media effect you describe.
Compound that with a kind of long-tail niche of hyperlocal activities and there's more scope for hope in the future. Sure things like theater and music have been are a lost cause. But maybe birdwatching in a nearby national park? Or groups that handle beach cleanup or beach erosion?
Maybe we're just in the middle of a (long) transition toward those kind of things.
For instance, many people are still gardening - not only because they like it, but also because the product, a beautiful garden, makes the effort worth it for them. I doubt many people would still garden if we could just display an equivalent garden in their AR glasses - similarly to how almost no one plays the instrument now because we've got recordings of music.
Today's equivalent would be smartphones, which are definitely harder to use the further out you are from civilization (I've got no reception 40 minutes from DT San Diego!)
When I think of unique opportunities in urban environments, I’m thinking more along the lines of nightlife, live sports, music, and theatre, boutique shopping, art galleries, etc. which I don’t consider to be particularly “passive” activities either.