Microvans exist. However they are not cost effective. Drivers are expensive and they don't get much better fuel economy than a bus that holds several times the number of passengers. Waymo changes the driver costs but not the other costs of running transit. Worse for the van, it holds few people so you dare not let it get popular because it can't handle a random surge of just two families trying to go somewhere at the same time. Your 4 person bus cannot handle my family of five, which is only slightly above average, there are bigger families in every neighborhood.

A larger bus is needed for useful transit.

Sure, but the Dallas residents still don't have the autonomous on-demand bus while they could have had a normal bus decades ago.

And I doubt that 4 or 12 is the ideal bus size in that place.