I think that's more of a side effect of a population increase. Though as we've seen over the past few decades, the most advanced societies tend to have a decrease in birth rates after a certain point. I don't think we should be striving to turn the entire Earth into Kowloon.
Oh of course not, that's an absolutely extreme example.
Yes, advanced societies tend to have a decrease in birth rates. Yet, they still keep getting denser, as people move to cities. Density, if done thoughtfully, can lead to increased economic output, better health, better environmental outcomes, less traffic (holding population constant, anyways), etc.
I don't think so.
Cities are much more efficient for the masses.
If you have 20 people that all evenly dispersed within 20 square miles, or 20 people within a square mile, more progress can be made in the square mile.