I wrestle with this one. Hub and I have lived for years together in apartments/carriage house/condos of between 600 and 800 sq ft, and have also contemplated living on a sailboat. I love the idea of a small cottage on a plot of land big enough to have a garden. But as much as the minimalism appeals to me, I'm not totally sold on the tiny house concept.
I had a friend whose family of 8 was raised in about 1000 sq ft, and hub grew up with a family of 5 in about 900sq ft. But the key was that, in those days, people spent a lot more time outside...no matter what the weather (we're in Canada--no Florida options here! :) ). Kids roamed around outside together all day; there was no space inside for play dates, etc. And that was the norm, so it was ok.
We're living now on a 1/2 acre in the smallest house we could find at the time: about 1800 sq ft. It feels ridiculous, as we spend 99% of our time on the main floor living area, which is 950 sqft. I'd LOVE to downsize. And love the idea of building. BUT. Back in the day, when people lived in those small spaces, they had workshops, barns, garages, summer kitchens, outbuildings.
I think small works if you have a really urban lifestyle--you want to live like a New Yorker or a European, doing your celebrations at restaurants, walking to museums, etc for entertainment, having a community garden plot. We just found that when we lived in our in-theory-really-desirable urban condo that we got bored...we are creative people with lots of hobbies who love camping and outdoor activities. We minimalized so much that we edited out our passions. :( So even when I think about downsizing, I have to remind myself that I want food storage, food processing space (for canning, etc), workshop space, storage for gardening supplies, the canoe, the bicycles, etc. When we bought our house, it was also important to me that we had space for family to come and stay. That space does get used a lot, but I would do without it.
These are personal decisions, of course, but I think there is such a thing as too minimal..although I reserve the right to change my mind! :)