Well and septic are viable options down to as little as half-acre lots, yes. Raw sewage is dumped into the first of 2-3 tanks, where it is biologically processed with virtually no intervention, before the nutrient-rich effluent eventually flows into a leach field and soaks into the topsoil.
Municipal sewage processing does it much the same way. The problem is that the cities don’t have sufficient biomass, so they have to discharge their effluent over a very large area. A city typically converts a nearby river into a massive leachfield.
You have a problem with individuals processing their own sewage and discharge it to vegetation on their own lands, but you support massively upscaling that process and dumping the effluent directly into waterways.
“Capitalism hellscape” accurately describes one of these scenarios, but not the one you’re thinking of.