Do you think that is impossible to built townhouse / rowhouse in The Sims 2?
These houses were built on larger lots then the lot was shrunk using Lot Adjuster, which allows reducing the non-buildable area with 1 square, making possible buildings that apparently continue from one lot to another.
The living-dining-kitchen area use an award-winning diagonal design to create the smallest house in the world of The Sims that offer comfort for a family of 4 sims!! Made in October 2012.
Lot size: 1×1.
Lot facing: South.
House price: $72,738.
House size: 8×8.
Floor area: 122 squares (excluding 4 squares of staircase void).
Expansions required: none, just base game only.
PS: I do not know how to create such small lots like 1×2. I downloaded them from ModTheSims.info (Mini residential lots by MaryLou).