I think the issue is that with slightly bigger lots and/or city services meant to alleviate these problems (sewage lines), much of what might be problems is smoothed over. Often there are laws about setbacks from property edges for dwellings, which may or may not apply to a structure which is not meant to be a dwelling. By skirting the rules or using a loophole, people may in some instances find why those rules were put in place in urban areas (i.e. where people live closely together).