They don't have...house parties? They just never invite multiple people over at once? That's...why?

From context and my understanding, it's the semi-formalized entertaining of relative strangers in your home that they don't do. Dinner parties, living-room cocktail parties a la Mad Men, or wild (possibly teen) debauches — I think it's the "people you're not intimate with" part that's foreign. The size of Japanese homes probably contributes almost as much as the cultural reserve.

(It's not like wild parties don't happen, after all, they just happen someplace where you're not cleaning out your personal liquor cabinet.)