How can we limit capacity of dwellings in town?

The capacity of dwellings is limited by the building code for health and safety reasons, based on physical characteristics such as the size of bedrooms. These zoning provisions are about living arrangements, not capacity.

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1. Would this definition change allow people to share their home with any number of unrelated individuals?
2. How can we limit capacity of dwellings in town?
3. What is the meaning of a single-family home if there is no requirement for a 'single family', technically multiple families could share a home as a household?
4. Any ways to deal with the above issues while protecting DEI goals?