As a broke college student we’d have people sitting on the floor in the living room and at random small tables or standing all over the apartment, with guests serving themselves from off the top of the stove. In tiny NYC apartments we’d pretty much do the same thing. In my current apartment in Brooklyn we have a table that can fit 6 in our living room and a kitchen big enough for one is all it takes to prepare a meal.
As an adult I’ve always made it a priority to never have a TV and always have space to hold small dinner parties.
(We have one of those big Amish extendable tables that go up to 15'.)
We're definitely not rich/elderly (well, early 60's, I guess that's pretty elderly by many young people's standards ;-).
Housing is not that expensive everywhere.
It’s just that most people who had such a room (in traditional semi-detached layouts) sacrificed it when eating in front of TV became normal; might as well get rid of a room with just a table that is never used, and turn it into another bedroom, or an extended living room. I chose not to do that, not even when I lived in your typical 2up-2down terrace, because eating around a table (most days in the kitchen, sometimes in a rearranged livingroom with an extendable table for occasions) is how I grew up, and there can be no tv while eating together.
Obviously if you are in London, any space is at premium; but London is just insane like that. Normal people do have the chance, they just opt out of it.
Given that the typical one bed flat has a single room that isn't bedroom, bathroom or kitchen (although actually, many modern builds seem to be not actually have such a room - it's just a living room with a cooking area up against one wall), do you move everything else out of the room with the table in? I'd probably have to move the sofa out, and a cabinet, so I could drag the table into the middle of the room so people could sit all around it, and I certainly don't have eight chairs to put around the table. It would seem like quite a waste of space to have so many extra chairs in the flat permanently just for the occasional dinner party. Where do they go when the table is contracted into four-spaces mode? Or do you borrow some? I do know people who've borrowed furniture for a particular event.
TLDR: it's not ideal, but doable.
Chairs, of course, were assembled from various other uses around the apt, and I had a few slight, almost space-less lawn chairs if I needed extra. In my smallest apartment, I'd pull the door against the couch, so that three people could sit down. But this was obviously not ideal because they sunk much lower...
I don't know where you live, but I guarantee you could find a large apartment or duplex or something to rent with a few friends, which would be cheaper than living alone and give you more space than you know what to do with. As an added bonus, you'd have a few reliable guests to seed your dinner parties.
Central London rental property is beyond ridiculous [1] (that's partly why I left). If you choose to live there, it's unreasonable to compare it to anywhere else -- except Hong Kong, Singapore, etc.
[1] https://www.gumtree.com/p/property-to-rent/nice-single-studi...
And then in America you can buy a 3000sq ft house for $150k, definitely room for a dinner party because there's not much else to do out there.