From the amount of houses, it doesn't look like you've been playing long? Are you sure you don't want to restart? I mean, you should like your own town...not be annoyed by it.
I love your town's layout! You could put a PWP there, such as a little area for a bench you could also put another bridge there and just use it as a pathway sort of thing
Well if you do want to reset I'm sure you could always find someone who'll let you use their plaza to store your items while you reset and then pick them back up once you're done? However it depends on whether or not that tiny section annoys you so much as to create a whole new town
For small spaces, you can always add little clusters of flowers/mushrooms/trees/bushes/small items, or maybe a small pwp like a bench or lamppost or maybe even a tree and surround it with small things like a couple bushes!
Or, if you have enough space, create designs with items and such on the ground, and repeat them off for away for cool little sections! c:
If it were my town, where you're standing is where I'd put my campsite...in fact from that villager's house down, I'd have an orchard with a little dirt path leading through the trees, down to the campsite...omg so cute...
the lighthouse would look good there... like others said, a campsite somewhere is needed anyway, right? if you add a bridge over there it'll link that space up to your main area and it wont seem like a small cast-aside space anymore. also, you could make it dedicated orchard space or dedicated hybrid-breeding space....