One of the most sold cars in Europe is the Volkswagen Golf; I don't see how that is tiny.
Interestingly, I see that mid and large size classes (mid-size being a "large family car") originated in USA, which makes me wonder if that's a typical American perception.
I'd even argue that 1400+ kg for moving around an average of 1.5 person/120 kg (I think an average of 2 people is too generous), during a time of ecological crisis, is tragic, and in my opinion, describes perfectly how there's no hope.
Are compact cars tiny? That is debatable. Compared to a 1961 Lincon Continental with suicide doors it is very tiny.
Your point would make sense if USA had high-speed trains linking big cities but it doesn't, and the train routes that do exist experience all sorts of delays which makes people choose planes even for shorter distances under 500 km which would take ~2 hr on high speed train.
In the US city status makes an important practical difference to how an area is run and what the people running it can do independently of the State they're in. So it makes sense every settlement with a general store and a paved road would want that status.
The status of various municipal designations varies greatly based on state laws. Generally, government levels go state->county->municipality. The type and form of a municipality generally only affects how it is organized, not its level of independence from higher levels of government. Some states restrict types and forms based on size, though.
The person you are responding to never even used the word cities.