A question about sewage treatment

It seems that green alternatives to modern sewage treatment are practical only for homes that are at some distance from one another, or at the very least, located near a plot of land, where the end-product can be used as fertilizer and so on. Can these alternatives be applied in small towns and cities? Or is it impossible even for small towns and cities to be environmentally friendly, at least with respect to fostering a local ecology and nuturing the cycle of life? How much sewage can be disposed of (without importing nutrients and so on to replenish the land) before this begins to have negative consequences? And what happens to the products of modern sewage treatment plants?