Accepted by planners as a way to make buildings feel less 'crowded' and baked into many zoning codes, setbacks achieve no benefit other than giving opponents of development a bargaining chip.

"Received wisdom holds that setbacks make urban spaces feel less crowded. They supposedly ensure that buildings do not overshadow streets and sidewalks. They create the illusion of less density and protect buildings’ personal space. They create room for 'green space,' 'light,' and 'park-like settings,' which sound great in real estate listings. They assume that buildings are impositions on their cityscapes, to be contained so as not to offend delicate sensibilities."
"To the proponents of setbacks, a few patches of grass might as well be Luxembourg Gardens. But think about the classic street in any of the cities I cited above. If you enjoy Paris or New York, you already know why you shouldn’t like setbacks. Density in a city is good. And not just population density. The actual appearance of density (which may or may not have anything to do with population density, depending on the type of structure in question) is good, too."
"Setbacks are the currency of anti-development activism. Homeowners who like their cities and their property values just fine don’t care how far away a building is from a street. They’re likely only to see those buildings at 35 miles per hour anyway, and probably from a lane or two away (plus a few feet if there’s a devil strip). But they know how to push planners around."
FULL STORY: Why Cities Should Back Off of Setbacks

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