Do you know, if you had posed this question 12months ago, I would have said I couldn't possibly downsize any further than my beautiful new spacious house.....then I packed up my life and lived out of two standard suitcases for the four of us for 3+ months. We lived in a tiny two bedroom unit (main room with living, kitchen and dining, two bedrooms and a combined bathroom and laundry) with very basic home furnishings. At the end of it, I could have easily continued to live there. Granted a few more of our own things would have been needed (like toys/children's stuff and a proper lounge lol), but we would have managed just fine.
When we did get our stuff out of storage and moved into a proper house it was much smaller than our previous house (company allocated). It just made us realise how much superfluous stuff we carry around in our lives.