Were they bulldozed and rebuilt into car-centric development?

From my understanding Strong Towns think "lower density, less intensely urban development" towns are fine. E.g. at 0:57 of the video, it's anything but intensely urban development.

"In this example, a 100-year-old commercial block, built in the traditional style of development, drastically outperformed a shiny new development, created in the modern car-centric style."

I would describe Arlington (1635), Belmont (1849), Waltham (1884), Watertown (1630), Lincoln (1754), Wellesley (1881), Newton (1688 town, 1874 city) as being substantially car-centric with respect to the majority of adult residents of those towns/cities owning a car today and using a car or car service more than 250 days out of the year. Arlington would be feasible to get by without a car in many of its areas. Others would be much more difficult in the majority of the land.

Looking at satellite images I would predict they would not do well financially with the infrastructure costs.

But then I look at the housing prices. TimPC's explanation seems legit.

Speaking as an Arlington resident, I would not describe it as "car centric", although cars are accommodated far more than I would like. It's still a classical streetcar suburb. The majority of Arlington's housing stock is from multifamily buildings within a couple of minutes walk to high frequency bus service (~5 minute wait).