Their streets tend to be super narrow, with pedestrians and bicycles sharing the shoulder. And back streets are basically alleys with pedestrians sharing the street with cars. Obviously parked cars there would be a disaster.

Also it tends to cost more via tolls to drive any significant distance than to take the train or bus (or plane for that matter), unless you have multiple people in the car. The car situation in Japan strikes me as more a case of regulatory capture than wise use of land. Because even small towns with vast empty spaces operate this way.