I've grown up with modest HO gauge layouts in the basement, and my late uncle in the Peoria, IL area had built a medium-sized HO layout in his basement as well. A family friend also had an HO layout in his basement, but he has now replaced it with a 2-rail "0" layout.
As far as "G Scale" layouts go, they do tend to be found outdoors. My late mother wanted a layout in the backyard but she and dad got involved in 1/8 scale ride-on trains (7.25" gauge) instead, running on outdoor club tracks. Some guys do manage to build modest indoor G layouts but the more spectacular ones get the attention.
Deals can still be found on used model RR equipment and accessories. Modular layout sections can also be built on a budget.
Having said the above, there are still wealthy individuals, perhaps of the Boomer generation, that do own large layouts. Tom Miller is known for his property that contains not only a very large mountainous 1:20 scale narrow gauge indoor layout but also a 7.5" gauge track outdoors with live steam locomotives.
I'm not sure how small the hobby is at this point, certainly it's shrinking like other hobbies as we age. I'd say model RR'ers are less visible to the public than, say, collector car owners/hot rodders, because they're in their basement. :-)
One fun final note, around Thanksgiving time in the northern Massachusetts/southern New Hampshire area, various members of a model railroad club open their basements to the public for one weekend.