...would you rather have the vendors not be available for about half the time? This is a classic trade-off: Gameplay over realism/immersion.

Same can be said about not seeing to many residential quarters: Those are not the areas in the cities we're visiting in the first place. All the cities are much larger than what we can actually see, so... just imagine that the people live in parts of the cities we dont visit.

Other than that: People might stay at the inns, most cities have building that we cant enter, outside of Ul'dah you'll find tents that the refugees live in, certain smaller areas/villages contain actual homes, with beds, kitchens etc.