Obviously some of that is to be expected of an island nation versus a continent-spanning one. And yet, so much of Tokyo seems like it's built at the scale of a small-town main street: Between the major roads with their skyscrapers sit networks of pedestrian-friendly streets with little shops and restaurants, often crossed by even smaller yokocho which themselves have bars and flats. Quiet side streets intermix residential buildings and even single-family homes, and yet somehow these little districts are all linked up together into the world's largest metropolis.
It has little to do with "island nation", most nations use mixed zoning, it's certainly the standard in europe (and recent developments are gravitating towards more mixed zoning e.g. Amsterdam's eastern docklands). It could have to do with being an old nation, but even then that's not actually true, the US existed for a while before cars happened.
Now I'm speculating, but I wonder if Japan, being mostly Japanese people, didn't have such a large group to exclude from certain neighborhoods? So they didn't entrench the institution of local control and exclusionary zoning?
The public schools I taught at in Japan kept (private) lists of which kids came from burakumin families.
I've lived in Japan for 30 years, and I've never seen the topic so clearly explained.
Edit: BTW, in case you were wondering about the special zoning classification, "bathhouses with private rooms" are in a very different business than bathhouses without private rooms.
One of the effects of how their zoning classes work is that you don't have "residential-only" zones with no shops or other amenities - instead you have zones defined along the lines of maximum nuisance and with overlapping uses. You have a total of 12 zones, which start from "exclusively low rise residential" that are essentially low density houses that can be also small shops or offices + schools, to exclusively industrial zones that prevent residential or other construction - but it's a spectrum between them.
https://urbankchoze.blogspot.com/2014/04/japanese-zoning.htm...