We currently have 1 vehicle, a minivan.
For a couple of years we lived car-free, depending on public transportation and on average, a monthly rental for a weekend/week. DH used public transport to get to work, the kids walked to school, and I did shopping (including groceries) mostly by walking or public transportation. We rented if we planned to do a lot of visiting or shopping or travelling/sightseeing. It was quite manageable, but I missed the convenience of a car (especially at 11 p.m. when I realized we'd used up the last of the bread and milk, and the nearest convenience store was a 45 minute walk away).
I think we limited our activities a lot though because we didn't have any car at all. The kids especially were in fewer extra-curricular activities and visited their friends much less. We were MUCH, MUCH less spontaneous. I disliked relying on other people for lifts so much, since we were unable to return the favour. I wouldn't want to go without one permanently.
We now have 1 car, and dh takes it daily to work - in a neighbouring municipality about 30 minutes highway driving away from our home. On average, one day a week, I will drive him to work, and then use the car during the day for groceries, getting the kids to extra-curricular activities, getting the dog to the vet., etc.
It's a bit of a pain for me to go out first thing in the morning, if I have to drive dh to work. I like to breakfast and shower after everyone has gone for the day, and the dog misses her long morning walk. It's a pain for dh, because he is often stuck at work, waiting for me to pick him up after I've dropped/picked up kids.
DS has his learner's license now, and once he is a fully licensed driver, there will be even more competition for the car.
DD can walk to school, although in bad weather she often takes public transportation. DS has to take public transportation to his high school, although in good weather he will skateboard. They could also bike, but honestly, the drivers in this city are pretty intolerant of cyclists (a lot of the cyclists don't follow the rules of the road either), so I don't mind that they don't want to bike.
I can't imagine being car-free or a 1-car family without a good, reliable public transportation system. I suppose it would be possible if you lived near all the amenities - schools, groceries, shopping, recreational facilities, health care and vet etc.
At some point, I can see that we will go back to being a 2-car family, but right now, we're managing fine. It is inconvenient to have only 1, but not intolerable.