It's a good, sustainable way of living. You can pack more people in a building with micro-units, increasing the density of people living in the building and area. Americans have to shed their wasteful thinking of the 1950s when it suddenly became the norm to have all of this ridiculous extra square footage. Innovation is constantly happening with micro-units and there are all sorts of different types that feature movable walls and incredible modular furniture.
Micro-units are not for people unwilling to shed the suburban fantasy way of life, but they are for progressive people that have a modern 21st century life that want to reduce their footprint. With this said, Boston has faltered so far with the implementation of them because the rents they are charging are slightly too high. Micro-units are supposed to be (primarily) affordable and the projected rents have ballooned up $300-$400 more than the original estimates.
Sorry, I studied/investigated micro-units with one of my friends during my final studio semester last year. I realize that I'm "in" the architectural think-tank on this issue and my views might be slightly skewed because of it. As I've said in the past, it's for a niche demographic - single, young professionals. I think the recent construction catering to this demographic (Boston has an insane number of this particular demographic) has been entirely appropriate. Price just needs to fall slightly.
Having a living room, a dining room, and two closets is ridiculously excessive within the context of a one-person apartment for "single, young professionals."
But you* have gone way too far in the other direction when you start talking about axing an apartment's
kitchen, or downsizing it to the point where it's a mini-fridge and half a table. If you're lucky, you'll even get an extra sink so that you don't have to use the bathroom's! Wow! Two sinks, talk about wasteful and unsustainable. And god forbid I find the idea of living out of a suitcase distasteful and want an actual dresser or closet to put my clothing in, I should just get with the program! Or, you know, take my wasteful lifestyle out to the suburbs because there's absolutely no middle ground whatsoever between "micro unit" and 1 bed / 1.5 bath / 6 room luxury condo. Right?
Take the communal kitchen away from this "micro-unit" farce and you're left with something completely unfit for human habitation by any reasonable standards. As it stands, the hovels you* are trying to pass off as 'healthy, sustainable living' are only barely on the correct side of the "Is this fit for human habitation?" question.
500~750sf apartments are every bit as sustainable as <300sf "micro" apartments, but unlike the "micro-unit," you can actually live in a 500 square foot apartment. I agree with davem - this is a brave step backwards and we should in no way be encouraging this. At best, it's an awful fad that will pass quickly - at worst, it's going to actually harm the "urban lifestyle" and drive people who are otherwise more than willing to stay in the city out of it.
(* In the context of these statements, "you" means "the architectural think-tanks that cooked up this farce.")