It's too bad, I think idea of organizing a social network based on proximity and centered around community information is a viable idea, It's just that NextDoor is doing that with our worst instincts.
NextDoor and Craigslist and Reddit's /r/{city} communities just prove that it may be viable but it's pretty undesirable. I think it's best to not give the most neurotic, ill people of your community the loudest voice, but these social networks also create this neuroticism and illness.
You also create a scenario (NextDoor especially) where all the sane people are driven out by the crazies. Back when NextDoor was new, after a year it would come up in conversation and sure enough, anyone normal would admit they tried it and had to delete it.
Social media is messing us up. I don't think we're missing some new take on it that's going to make it all better. I think the vestigially tribal parts of our brain make it a non-starter. We need to get back to the face-to-face -- it seems to be the only way we keep in mind that there's a human at the other end of the line, not some nebulous automaton that we craft into everything we hate in the world.
This is a fair point, and one I think is very important to consider. When I wrote the original quote, I was not thinking of another facebook, but rather a platform that would work on issues like providing access to local government meetings, and probably be closer to what we now think of as "journalism". Which the lack of is a major problem in many parts of the country due to the declining newspaper industry.
Small towns and rural America is in trouble, and although it's naive to say there are simple solutions, I am optimistic that it is possible for technology to solve some problems.