Yes, root zone treatment only works really well where you have space. Here in Jakarta everyone has septic systems in a city twice the size of New York. I wouldn't drink the well water even if you boiled it. The major concerns include things like organic chemicals/solvants, and the like. many of these things take time to break down in the soil, and they require sufficient soil to break down in, neither of these work very well in a crowded city. For houses with wells, you can actually smell the water.
For large cities, I am not convinced they are more sustainable either. The basic problem is that there are things you can do with centralized treatment (on a city level) that you can't in the root zone. For example, you can harvest methane, compress it, and pipe it into the natural gas system. This itself may be a partial answer to decarbonizing heating for folks with gas heating systems and severe fabric constraints on their houses. However for rural systems they are the way to go.