Having now found time to read your original post in detail I can tell you, Dotz50 that in your situation. I think you would be mad to downsize. It would completely dismember and destroy your family life and social life based on older family, who need you nearby.
Downsizing is sonething you do when life circumstances change and staying in your current home becomes untenable. We are moving and own sizing on our 80s because our house has a large garden that I now need paid help to manage, DH has been seriously ill and is now much less able and circumstances mean our children live between 100-200 miles away. So we are now looking for a house with only a small garden, closer to our children. This means that we are moving somewhere more suited to our changed currant and future requirements. The move is a positive move and we look forward to it.
You cannot say that about your move as you frame it. As for worrying about young families, there are also more old people who need to downsize than suitable homes and while if you move a family could move in to your house, if you do not move some older people who desperately need a flat or bungalow will be left struggling in unsuitable accommodation.
As for the knees and stairs problem. The answer is simple - a stair lift - and if you are on a low income the council will fit that for free.