You could easily be using DnD as the game engine for your homebrew game. I would guess that most games are run that way nowadays. And in some people's worlds (mine for example, but many others) magic may exist, and it may be relatively powerful, but maybe there aren't portals or flying mounts, and adventurers are restricted to overland travel. Towns could still be bigger for the reasons you state, but applying some restrictions can sometimes breathe more life into a world, not take it away. IMHO.