When these small houses were built there was lots of room and fewer people. That has changed and there are more people who need to live in the same area. Neighbourhoods will change and densify. The only alternative is to grow outward and that is not a viable option as it creates land use and traffic issues.
As for the aesthetics issues, older homes are built very inefficiently. There is a lot of wasted space. Newer construction has to use the space more efficiently to allow more people to live on the same lot. Newer construction will be boxier as it is more space efficient.
Growth is like a balloon. You either let it grow up or, if you try to push it down, it will grow out. Neighbourhoods will change. Deal with it.