There are multiple ways to skin this cat.
For example, you can use LODs in several levels, where it’s not just “the same mesh but fewer polygons,” but you actually make multiple houses into a single mesh with a single material, to use at a distance. Even further away, you may be able to bake stand-ins, similar to cruciforms or boxes with the buildings painted on them.
It also depends on what your intended viewpoint is. A flight simulator has different requirements from a first person shooter. If you’re always at street level, doing a lot of work with visibility zones and occlusion will help a lot, whereas if you can climb to the roof (or fly,) that’s not going to help as much.
So, yes, the engine can realize a town like this, with good frame rates on a modern gaming computer. However, exactly how much work you have to do to get the engine to those frame rates, depends on your specific needs and use cases.