With modern automation and AI, tracking and adjusting paths is better every year. Also, anything with malfunctioning movement will quickly descend and burn up in the atmosphere at that very low orbit.

Space could become so full of junk that it may actually harm operations.

Yes and I'll become another space industry. Cleanup. Sort of like how (coal/ocean/etc) pollution is both a problem and multi billion dollar a year industry.

Satellites flying at 360km (the target altitude for starlink V3) deorbit very quickly without regular burns. Dead starlink satellites are guaranteed to come down within 5 years.

space is very large but low earth orbit is not.