I must say I am both very happy and very sad with the little bit of information we got on Housing with the newest update on PTS.
This is the relevant part on the Patch Notes:
World Building
A few new buildings were added to several zones, and the zone maps were updated accordingly. These buildings are not accessible at this time. In some of these locations, wildlife, and/or bystanders were removed or adjusted to make way for the new construction. In addition, some residents have been moved from their homes, and those buildings are no longer accessible. These changes are in preparation for the upcoming release of Player Housing.
And this is an interesting thread with all the information and screenshots people are gathering.
https://forums.elderscrollsonline.com/en-GB/discussion/275343/spot-the-difference-construction-in-tamriel-thread/p1
Alright. That said, let's get to the point. First a few notes:
- Yes, I'm aware Housing is far away from us still. But I think they're clearly working on it, it seems, and the sooner we give our input, the most probable some things are going to change or work as we'd love to see them work

- Yes, this is just my opinion

- And yes, I know I'm mostly assuming things - but I'm assuming them from the info we have already.
In my own experience, I'd say there are "3" main types of Housing in MMOs. There are several more, yes, but I'll make a generalisation for the sake of the explanation.
I'll call them
"Instanced Housing", "Instanced Neighborhoods" and
"Sandbox Housing"
So, what's the whole point of this thread:
I'm happy that we are getting HOUSING, I'm disappointed that we are apparently getting Instanced Housing and not INSTANCED NEIGHBORHOODS.
This is the whole point of this thread. I know that with the new additions it's very
UNLIKELY that there's still time to change the design... But one can only dream - and that's the purpose of this thread - to dream about Instanced Neighborhoods.
If you kind of understand the difference between the 3 types I pointed out, you can stop reading here.
If not, I'll try to explain the basic difference between the 3 types below:
INSTANCED HOUSING
This is what appears to be ESO's model. Several houses around the world can be bought, acquired by quests, etc... Whatever. Point is - once you get a house, you can enter your very own "private" version of it - your own instance. The outside is a normal game region, so it's shared by everyone else, including other people that own that same house. Which means you'll see a lot of movement by your door - people getting in and out - but when YOU go in, it's your private little space.
The Pro:
It works. It's safe and stable. You can visit friends or be visited using party mechanics (probably) like... when two people own the same house, you can visit your friend's if he's group leader. Just an example - point is: it works.
The Con:
It feels kind of lonely. No sense of attachment to the outside whatsoever, the interior feels like your very own Oblivion realm, away from reality and the universe, while the exterior will be a crowded place full of strangers. Not really immersive.
INSTANCED NEIGHBORHOODS
Here's where the cookie gets tasty. Instanced Neighborhoods are almost like Instanced Housing. The catch is - instead of having your own private INTERIOR instance with the exterior being part of the normal world, you get an INSTANCED AREA with several houses - your "neighborhood" and each house can be privately owned by someone. Functionally, it's pretty much the same as instanced housing, with 2 key differences: 1- Your house is your own, you won't see other people going in and out of it because the other people that own that same house, own it in different neighborhoods (instances)
2- There's a greater sense of belonging and community. Neighborhoods have the same fixed residents (unless someone moves, etc.) and so you get to meet these people, hold events with them, visit them, etc. You can actually "see" your neighbors and they're always the same people - not a shared with everyone exterior like houses in the game world. This also provides a lot more of variety for houses and locations.
How it works: Imagine a gate in the outskirts of some region. Deshaan, for example. When you get to that gate, it asks you "Which Neighborhood would you like to go to?" and then you get a list of neighborhoods - the server generates more as they fill up. They have random yet lore-friendly names. So you actually get an address: You can live on House 5 of the East Overlook in Deshaan's Vivec's Blessing neighborhood (for example) and people can physically get to your house - your very own house - and not a random building everyone owns.
The Pro:
Basically the same functionalities as Instanced Housing + Communities, community events, and all that. Greater sense of belonging to the world. Far more immersive. Neighborhood content is possible: events, mini-games, vendors, collective projects (like upgradeable market squares which players from the same neighborhood can improve), etc... anything is possible.
The Con:
Far more work is required from ZOS. :P Some people might have trouble memorizing their address?
SANDBOX HOUSING
I'll keep this short because it's not really relevant for this thread. It's when the game allows you to build or place your very own house within the actual game world. Not an instance, nothing - the actual game world.
This is impossible for ESO. Not only it was not built for that (there's literally no room) but also because the game has not enough sandbox elements to justify this kind of housing (like farming, etc...) It's really cool for games built with this purpose - but not really good for ESO, as tempting as it may be to ask for it, there's simply no way to make it work nice here. Unless, perhaps, one day, we get new, huge regions JUST FOR THAT. But that's a whole different story

Examples
I can name two games which have awesome Neighborhood Housing systems. Regardless of their requirements (pay walls and such), both LOTRO's and Final Fantasy XIV's Housing system are awesome and based on neighborhoods.
It adds so much depth and flavour to housing, allows you to meet new people (or conquer whole neighborhoods with your friends!) and stuff like that - not to mention Guild Halls, garden decoration, community parties and building your own home on your plot (FFXIV)
So, if you're curious about how fun Neighborhood Housing is, google/go to youtube for these two housing systems!
... Please, ZOS, reconsider the design if you're just aiming to regular instanced houses. I promise you there's a lot more of potential (and profit!) for Instanced Neighborhoods!