There are a lot of small towns that are totally walkable. The problem recently IMHO has been that town centers have let commercial development crowd out residential areas and/or people have fled the centers of downtown areas as rents, housing prices and crime went up in small town centers as big box stores drove the downtown shops out of business. Downtown for many small towns is only one Walmart away from being destabilized.

And since I'm familiar with New York beyond Times Square, let me say that truly great urban areas have many, many retail centers and transit hubs. Just in Manhattan there's Union Square, Grand Central, Herald Square, Fulton Street, Columbus Circle, 86th street and Lex on the East side, 72nd & B'way on the West Side, 125th street in Harlem. Then there's dozens of satellite commercial and transportation hubs in the outer boroughs and Northern New Jersey, Westchester, Long Island and Connecticut. These major and minor hubs all work together to create the largest commuter rail network in the United States.