You can just choose to use light at a smaller wavelength.
Also, less density by itself doesn't mean less performance, the larger optical components can just run faster to end up with higher overal performance.
In principle, yes, but:
- lower wavelength light is harder to confine within waveguides (or transmissive optics), and messes up atoms when colliding (think of x-rays),
- finding an efficient source at lower wavelengths is one of the main struggles of the semiconductor industry.
You can just choose to use light at a smaller wavelength.
Also, less density by itself doesn't mean less performance, the larger optical components can just run faster to end up with higher overal performance.