Normally we draw each building as a separate outline with building=yes ( or residential or what ever) and with address.
When we do it in Megacities with a lot of small buildings, navigation systems based on OSM doesn´t work well because of data amount.
In such cases i would suggest a kind of generalisation for data reduction.
I think this is not a problem at the moment.
e.g. the USA is much huger then India and there is no problem with navigation systems.
It´s no theory - it´s experience with navigation data: Indian buildings are significantly smaller than USA buildings.
The problem is the number of elements per km2. I tested it with real data from India.
All this elements loaded in RAM causes system crash
I agree with Marek. Because of population effect many places are very small & congested compare to western world.
P.S. Past suggest: Approach (Tricks & Tips) working outside India, hardly work in India and vice versa