The "trick" here is that all the rooms (& bathroom, kitchen, etc) are small and well though out so you really use up most of the space - basically the "empty" space would only be there if neccesary for movement.

Here's a quick example (~430sqft not counting the balcony): https://www.njuskalo.hr/image-w920x690/nekretnine/rudes-jabl... This would be okay while the kids are small, and having an extra ~100sqft would add another room for the other kid, or have larger kids' room.

So yeah - fascinating to compare the expectations on both sides of the pond.