Caltrain capacity when I used to visit was on the level of a low traffic suburban train line elsewhere. It felt comical from someone used to e.g commuting on London trains.
It may well be it needs upgrades to be able to handle more, but even just having the land is a major part of the cost. It's certainly better than depending on trying to dump higher density housing in the middle of neighbourhoods where transport upgrades will require starting from scratch.
And if remote working continues, that'd allow far more housing near transport hubs. People will still travel on occasion, for all kinds of reasons.
And the second advantage of construction near transport hubs is that it usually means fewer neighbours likely to object. E.g. last time I was at Palo Alto at least, there was no low density housing immediately surrounding the station, and even where there is, there's typically little enough to make buying up the required properties to resolve the issues a lot easier.