Have you tried https://github.com/B00merang-Project/Windows-95 or any of the similar themes by that project? There's a bit of extra padding still but it's vastly more usable than the Adwaita default. (And of course you don't need to bother w/ the retro icon packs shown in the screenshot, the basic GTK+ theme is plenty enough.)
(The best UI with that kind of widget style today is arguably SerenityOS, but the repo I linked above tries to provide something similar for existing GTK+ apps.)
I have, I've actually written my own GTK theme years ago, before I gave up on it. B00merang Project's stuff is cool -- still way larger than it ought to be but indeed better -- but GTK theming is a raging dumpster fire.
Not just GTK themes but all of the tweaks and extensions that are apparently necessary to have a UI usable by an adult. Even then it's a moving target and some GNOME update will break random shit or remove some control. It's absolutely infuriating.
While I like the overall feeling of those themes for nostalgia reasons, they've got all sorts of quirks. E.g. toolbar icons aren't correctly aligned (you can see that in the screenshot, on the "forward" and "back" buttons in the left corner) -- both the horizontal and the vertical margins are wrong. It's not the authors' fault. I've poked at GTK's CSS before -- you can't make it work, not at the current abstraction level.
Also, for comparison, a Finder sidebar item is about half the height of the (unresizable) Nautilus sidebar item in the screenshot. Thank God for Thunar at least :-).
(The best UI with that kind of widget style today is arguably SerenityOS, but the repo I linked above tries to provide something similar for existing GTK+ apps.)