The backs of DA buildings hug the back of muggle London buildings, magic prevents muggles from messing with the border.

I also always imagined DA as the main street of a magical district in London, not the entirety of the district. There's probably a few other streets. This of course breaks the "there are fewer than 10k wizards in UK", but JK sucks at math, I never took that figure seriously. If I had to throw out a number, I'd go for at least a 100k.

 

I could see some more of London being populated, if only because muggleborns in ages past would have wanted to stay close to their families after graduating from Hogwarts, and London had a higher likelihood of muggleborns than any other place in the country simply due to relative population. On top of that, there would have been a time when apparation had not been invented, so physical proximity would have played a role in how wizards travelled. If a settlement was developed before apparation then, barring destruction, it would likely keep going.

I could also see smaller wizarding settlements throughout the UK, mostly attached to muggle towns like Godric's Hollow, but some exclusively wizarding ones like Hogsmeade. I wouldn't make them any bigger than that, though. No more than a village's worth.

 

I also see random wizarding properties scattered in muggle cities/town/villages, like GP12. The precedent is in canon. Why does wizarding Britain have to be crammed into DA, Ministry, Azkaban, Hogsmeade and Hogwarts?

Edit: I mean that I don't take Arthur Weasley to be the typical example of wizarding familiarity with muggles. It's just wizarding quirkiness that a guy who doesn't know what rubber ducks are for heads the department he does in the Ministry. I assume there are muggleborns living in muggle buildings but that doesn't stop them from being wizards.

 

London has been around for centuries, diagonal alley might be a market square or district originally. And they purposely had the muggles build up the shops around it, as a way to truly conceal it away. So it became an alley way over time.

 

it's worth mentioning that Ollivander's was established 382 B.C. according to book one.

Interestingly, the shop was described as narrow and shabby with peeling gold letters over the door of the shop read: Ollivanders: Makers of Fine Wands since 382 B.C.

If we take that to mean that this shop, not just the brand "Ollivander's" has existed here since then, that's even before the roman occupation of Britain. Wiki says there is (sparse) evidence of settlement in the London area since even before then. Maybe there has been a magical settlement in the area since then as well?

 

This. The Leaky Cauldron is on Charing Cross road, within the West End. As Wikipedia says:

https://en.wikipedia.org/wiki/West_End_of_London

Since wizarding settlement of the area well predates the 1600s, Diagon Alley, or at least its historic predecessor, would not have been a part of a continuous high density urban area with Westminster or the City of London. Rather it would have more resembled a village which later became subsumed into Greater London as the various boroughs of London grew and merged into one continuous city.

Which connects to the point about wizarding settlement of the area being pre-Roman. The Roman city of Londinium was/is further to the east of Diagon alley. In Roman times that area would have been empty marshland. It's entirely possible that Ollivander's shop was once just a house in the middle of a marsh with nothing around it. Wizards would come from far and wide to visit the wandmaker in his own house, where they would buy wands. Over time other wizarding tradespeople decided to set-up nearby, and Diagon Alley developed.

Just one possibility.

 

There's all sorts of possibilities, depending on how much expansionary worldbuilding you feel like doing.

The most conservative option, i.e. one that involves the fewest additions to canon, would simply be the "there's nothing there" option, in which the back of Diagon Alley meets Muggle London directly. You don't necessarily have to go the windowless route - equally you could go the enchantment route where Muggles see something different to what is actually there. As for what wizards see, that of course depends on what type of Muggle London is on the other side. It could be the service access to Muggle buildings (where deliveries are performed, waste is collected, etc.) it could be gardens, it could be courtyards... it could even just be a Muggle road.

There are lots of places in Britain where you have a terrace of buildings with a road both sides of the terrace. Sometimes in this situation you have a front entrance on one street and a back entrance on the other. Given wizarding secrecy, it would seem likely that the wizards would have bricked up any entrance on the Muggle side. This would not make the Muggles blink - there are plenty of fake terraces around the country. Sometimes a factory was built to appear like a residential terrace from the outside but none of the doors to the "houses" would open. Other times they would build just a wall that looked like it was the front of a residential terrace to disguise train tracks.

If you went this route it could even be that the wizarding side was actually the back entrance in the historic alley, pre-Statute. Then when the Statute of Secrecy was passed, the wizards boarded up the entrances to their shops on the Muggle side and started trading out of their back entrances.

Of course there are plenty of alternative options for people who want to expand wizarding London. This is not my own preference for a canon-compliant fic as I feel that there's a strong culture of rural living among British wizards, and indeed a preference for remote locations within international wizarding culture. I don't think "urban wizardry" should be very big on that basis. However, even within those limits you can posit a few additional wizarding streets adjoining Diagon Alley.

 

I agree that there would be more to the London wizarding community than just the two allies. The way I imagine the alley is that it is placed between the Muggle buildings and as such doesn't really take away any space, and is not visible from higher buildings in the area or when flying over it. Muggle maps don't take it into account because there's nothing there.

That said, just because the Ollivanders have been making fine wands since 382 B.C. doesn't mean they've been in that one Diagon Alley shop since then. The alley doesn't look like it's more than 2,000 years old after all. (Except maybe Gringotts, but I'm sure it's not that old either)

My belief is that the Alley had started forming before the statute of secrecy, because a place away from the filthy muggles is always appreciated. It simply expanded since then.