I agree that the settlements themselves would have been relatively dense. However, this is missing two critical elements: they were (a) tiny by modern standards

I agree that the settlements themselves would have been relatively dense. However, this is missing two critical elements: they were (a) tiny by modern standards, and (b) surrounded by vast expanses of open, uninhabited space. That meant that, while you wouldn't have necessarily had much in the way of privacy in your own dwelling, you could easily walk out of the village and seek solitude for as long and as often as you wanted. I think this makes a huge difference to social dynamics and we basically haven't properly coped with it since cities of any substantial size have existed.