It kind of works that way. The developers have to get their units approved by the city, which itself has a master plan of the type of growth/urban mix they'd like. The city government is making that decision to allow subdivision blooms at the city edge.
If the city is content with being a bedroom community, they'll allow developers to build anything. However, if the city wants to encourage more downtown or walkability, they'll only approve projects that offer wider sidewalks, business downstairs/lofts upstairs. Or they'll provide incentives to encourage this kind of growth.
My fathers civil engineering company is working with a small town on their 15-20 year master plan. You can see how they've blended their community values into the kind of development they want to attract (Shandon, CA):
"In order to achieve a compact urban form, the Community Plan encourages floor area ratios consistent with those found in small downtowns rather than in suburban settings."
"The neighborhood commercial areas are intended to serve a neighborhood’s daily retail needs. Uses typically found within these areas include markets, restaurants, cafés/delis,bakeries, ice cream parlors, pharmacies, laundromats, barbershops, hair salons, hardwarestores, gas stations, banks, offices, and other similar uses generally serving nearby residential areas."