It allows for a greater variety of things (museums, concerts, etc.), but to get that you have to deal with higher contention and, thus, costs across all things

It allows for a greater variety of things (museums, concerts, etc.), but to get that you have to deal with higher contention and, thus, costs across all things (whether in terms of time spent waiting or money spent outbidding others), including, crucially, the things you consume the most of (roads, housing, etc.). So maybe a good way to think about it is: if you have a lifestyle that requires a modest amount of most resources, then the variety provided by density may be worth the increased resource contention, but if you have a lifestyle that requires a lot of certain resources (like space for kids), then the tradeoff may no longer make sense.