WFH and H-WFH would be broadly popular among the electorate and could probably take off with just some changes to the tax code.
Presuming everyone does want to live in a dense area (I do not), building housing and infrastructure is expensive and at the end of the day it has to be profitable to build. We don't really have the framework to zone municipalities at the Federal level. So now you are talking about leaving it to the individual states... and I think you can see where that goes.
Given all that, yes, fewer miles driven in aggregate is a good and easy win for the environment. Less gasoline consumed, fewer tires and brake pads consumed, less work clothes bought, less meals purchased at lunch, etc.