Its not just a space optimization but a locality optimization. Interestingly, both models show up in Cities: Skylines, and the transition point between them is usually a painful inflection point in your city's development. The reason many megacities (I'm thinking particularly of NYC + Asian megacities like Beijing, Taipei, Hong Kong, Shanghai, etc.) have converged upon high-rise condominiums with street-level retail taking up whole city blocks with abundant bus & mass transit routes is because at a certain population density the suburban model ceases to work, and this becomes the only feasible way to move people to work & shopping.
The reason so many mid-size American cities have converged upon 1/4 acre lots with a road hierarchy, 3-lane boulevards, commercial strip malls on the boulevards, office parks, and freeways to link suburbs is that that's the most efficient way to satisfy the constraints of 2-3 child nuclear families who want privacy and a patch of greenery that's all their own and have varied destinations that each support too little traffic to be worth building mass transit to.
I think the problem - in SimCity, Cities: Skylines, other video games, and real life - is that if you're building for aesthetics, there are many right answers, but if you're building for efficiency, there's only one right answer. People have certainly built Cities: Skylines cities with mixed-use developments, quaint mountain towns, little enclaves built around a park or monument, car-less cities, pedestrian-only cities, modular cities connected by mass transit, etc. The Sims 3 was scaled up so you could seamlessly walk around small towns, but The Sims 4 went back to focusing on houses or apartments in individual lots or flats, instead of expanding to simulating entire cities. But it doesn't simulate "urban dynamics" between zones, just "personal dynamics" between the people and the architecture and contents of the buildings. The Sims is whole a game unto itself at a different level of abstraction, that lets you build multi-story residential and commercial buildings with walls, doors, windows, furniture, etc. It's as much a game about pedestrian traffic, elevators, queuing and congestion, as an economic simulation. Sim Tower supports mixed use zoning (with different discrete rooms in the same building), but just within one high rise tower, not a whole city. Imagine if every building and skyscraper in the city were that complex! The closest thing SimCity comes to mixed use zoning is multi-layered Arcologies, and the interface to those is pretty complicated and unwieldy. Think of the number of extra user interface panels and gizmos and views and pop-ups and menus that users would have to wrangle in order to build, edit, query, visualize, and maintain 3D multiple story mixed use buildings in a city simulation, instead of having a simple 1:1 correspondence between space on the 2D map and zone type.
Theoretically the computer can simulate whatever model you can dream up, but the much harder problem is the user understanding, visualizing and editing that model with an easy interface that feels fun like playing a game, not tedious like doing your taxes in Excel or rigging skeletons in 3D Studio Max. It's very much because of gameplay issues.