I still think it would work better to portray small villages, rather than what looks like a single neighbourhood of a city. That way you could surround the playable area with rural stuff which would look nice, make for a unique setting, and not be so taxing on performance. But of course the whole point is that it’s customisable by the player.
No doubt you could have larger Canvas Towns as well - but yeah, I assume that the bigger the town, the more it’ll affect performance. It reminds me of that meme about “you can have two of these 3 things” (usually some variation on ‘good’, ‘fast’, and ‘cheap’). For InZoi the trade-off seems to be ‘large cities’, ‘detailed cities’, and ‘smooth performance’.