I have been building paper model buildings and houses in HO scale for my ongoing railroad project. I started using paper cutouts from Alistair Lee and they were OK. I built a scale model of the house I live in but when I compare it to the Alistair Lee models, my house is so much larger than the paper models from Alistair Lee. The model of my house which is a typical 1800SF ranch is too large to fit into my layout; it just takes up too much real estate. It seems that commercial structures are made under sized. I built a paper model house that scales up to a single-story size of just over 500SF; It takes up a space of just 3-3/4" x 2-7/8". The model of my house takes up a space of 7" x 8" in an L-shape. It appears to me that model building has to take into account available space and compromise taken to fit buildings and structures into perspective. The models you see on layouts look alright until you place scale people and vehicles in the scene, a supermarket appears too small and could only hold very few people.

Other examples: roadways are too narrow; center road strips are much too long and wide; If they were in scale, they would barely show up. I guess model railroaders take a very large license in designing their layouts. I see people swimming and fishing in a pool of water barely larger than an actual mud puddle. Houses and buildings are placed much too close to trackwork. I know this is a compromise due to space considerations. We can't all have a layout like a "Miniature Wonderland" where everything is in scale. I find that most layouts have too much trackwork which crowds out any secondary components, like buildings and scenery. My layout that is in the process of being built shows me that I am trying to fit a large amount of trackage into a small space. Sure, it's nice to see a long train run around and negotiate turnouts and the like, but structures are taking a back seat and I discovered it by the model house I built to scale.

Being an engineer and attentive of detail, my tendency is to have a "critical" eye of the world around me and also of myself. I don't know if I am just being over-critical and should just get over it and accept things as they are.

Our layouts are concentrates of some reality, if we wanted to be closer to the real we would care very little about them.
I saw a few layouts that were done on a real scale and they looked empty (I mean the relief and the surroundings of the track)
There is a well-known saying "Less is more" which is hard to stick to because our desires are always bigger than space.

Great topic and one that I have been struggling with on my Z scale layout. I have found that taking some liberties, if within tasteful bounds, is often a necessity and I'm mostly okay with that.