Housing was originally designed around Free Companies. Players asked for personal as well, and SE capitulated. This eventually was to the detriment of Free Companies, who found themselves competing with a lot of single individuals for space. SE addressed this by adding land and setting a temporary embargo on personals, so FCs had first pick. After a few months they unlocked it to allow people to purchase whatever remained as personal housing.
SE's attitude is that FCs should get a higher priority on housing, and that is how the allotment of FC wards and personal wards came to be. Whether people agree on that or not, well, YMMV.
Personally, I think it's given rise to the 'shell' FCs everyone keeps talking about. It's not as simple as that, of course, but people like to drum it down to '1-4 people automatically = shell FC automatically = bad'. There's a lot more to it than that.
The social structure of the game isn't as it used to be. Players no longer need to be in the same FC, the same World and pretty soon not even the same Data Center. Linkshells and Cross-World Linkshells and Party Finder make communication and coordination possible outside FC chat. You can move to another World to hang out with friends and do Fates or roleplay. Your static can be made up of 8 people from anywhere on the DC. There's no longer a need to contain people in a big free company. There's also outside influences like Discord, where you can join communities and make new friends or connections.
Free companies no longer provide advantages they used to. Actions are nice, but not make or break. FC rooms are ok but you can get an apartment that won't ever be demolished no matter how many times you change your Free Company. The Workshop and gardening are usually not things rank and file FC members ever touch.
It's given rise to smaller FCs, made of 1-4 people. Sometimes just a sub shack shell, but just as often it's a handful of friends who want control over the entirety of the FC, who are part of larger communities. I'll use myself as an example. Yes, I'm the FC master of a company on Brynhildr, but I'm part of several different communities. Roleplay, housing decoration, PvE content, marketboard sales, etc. My friends in my FC? Many of them are more central on other servers now. It doesn't matter to us, we're still in contact. We talk almost every day, do and plan things together. But there's no pressing need for us to all be located on the same server and cloistered into the same FC. And I see this trend spreading across the various communities I hang around in.
Does this make my FC a shell? By current definition, yeah. But honestly I don't see it that way. I have a friend decorating the FC house to make a stage for RP, for dozens of people to enjoy through planned events. I handle the workshop. Another friend is in there to use the gardens.
And this is starting to become the norm. It's not bad, just different, adaptive. We need to stop assuming small FCs are all explotative sub shacks.