The further you spread people out, the more you need cars.
There's a third option that reduces both driving and also air pollution levels in residential areas: small but dense cities/towns perhaps 2 miles in diameter for walkability, surrounded by nature or farmland to ensure fresh breezes and other health benefits, linked together by electric trains for commuting to other towns.
"We will be lucky if we can make the transition from our current circumstances to a future of re-sized, re-scaled cities and a reactivated productive rural landscape outside them, with a hierarchy of hamlets, villages, and towns in between, and some ability to conduct commerce and manufacturing." --James Howard Kunstler, A Reflection on Cities of the Future.