Love your sponge
The way to not just survive in a small space, but thrive is to love everything in it—including your sponge.
There are plenty of annoyances living in a small space. Lack of privacy, tripping over each other, having no room for a suitcase when you need to pack...the list is really long. Something I found incredibly useful for learning to love your small space is to love everything in it, even the crappy stuff like cleaning supplies and junk drawers.
Most people spend money on the things that guests will see, but then skimp on the things that are for their eyes only. For example, they have a lovely dining table, but their vacuum is a POS. When your space is small, you can't hide things in the closet so there is no such thing as "for guests to see" and "guests not to see".
Don't just turn your focus to public spaces—make sure everywhere you turn there is something you love. Finding ways to make everything, even the unlovable things like sponges, beautiful and functional will help you find joy in your space.