As a former LC owner and now owner of a 07 Sequoia I will tell you why. #1 space yes there is a difference and a big enough one to force me to sell my cherry LC and get a Sequoia. Having said that todays Sequoia is too damn big given we just spent yesterday in San Francisco with 8 family members doing the Tourist guide thing with the Sequoia which easily fit the tight parking situations in SF. The new one would have been an epic pain in the A--ss to take. And no the LC would not seat 8 with three decent sized people in the 3rd row.
Last of all the LC mileage is pretty dismal when I had mine I just didn't care given thats what you get with an LC. The typical 4-5mpg increase in averages we get with the Sequoia has been very nice! Is it a LC? No! but with the advanced traction hunting systems on the newer one's dumping the soccer mom steps and putting decent tires on the Sequoia it easily can meet the needs of what 99.98% of the LC owners do with their LC's except all while posting better mileage and offering up more seating room for the butts in seats hauling needs. We treat our Sequoia like a highly capable Sienna yes its been off road it did a Gwagen trip north of the Rubicon with some friends last year fun trip did great but dumping the soccer mom steps would have made it more fun, a rear locker would have made it pretty damn good too. Is it a LC? Hell no!!!
I think either a Sequoia or LC would be equally impractical for the urban activities your are describing.
Also, according to the EPA, the Sequoia actually gets worse mpg than the 200 series LC:
https://www.fueleconomy.gov/feg/Find.do?action=sbs&id=32227&id=33262&id=33264&id=33263