In Japan there's a subset of cars called Kei or small cars, and they're very popular due to the lower tax, initial cost, fuel consumption and ease of parking.

In states of Australia registration is more expensive depending on the amount of doors and cylinders your car has. This doesn't seem to stop big cars being popular though, the #1 selling car in Australia is the Ford Ranger (which is BIG in Australian car standards). We're working on getting F150s sized vehicles even more heavily taxed, they aren't seeing wide adoption here and they're pretty highly criticised.

In cities like Rome you can see many small cars due to the nature of their streets and parking.

For highway driving these cars are a bit less comfortable but honestly modern Kei cars aren't even that bad. The Fiat 500 isn't a Kei sized car but it is also a very reasonable highway and city car, it can happily do both.