The vast majority of undergrads live on campus. Off-campus housing is quite expensive (it's in Palo Alto), since you're competing with Googlers and the like for real estate.
This is not a problem or experience unique to Stanford: NYC has 600,000 university students living in it, and they manage to tear it up just fine without relying on the campus to host their parties.
The point is that the vast majority of Stanford undergrads live on-campus. That is presumably not true for universities in NYC. Given that Stanford undergrads live almost entirely on-campus, it is not surprising that on-campus parties form the backbone of the party scene. And given that most undergrads in NYC do not live on-campus, it is not surprising that their party scenes are not as impacted by campus rules.
Boring and smaller aren't the concern: I went to a large state school in an extremely boring suburb of DC. We still managed to cram people into overpriced off-campus housing and to drink ourselves stupid.
Sure, there are just very few Stanford undergrads who live off-campus. And most Stanford undergrads would not choose to live off-campus in order to be able to party more.
They are adults, and if there are no reasonable venues for being able to do regular adult things, for intentional reasons or not, they will create venues somehow, someway.
If there is anything to be learned from Prohibition, it is if you make rules too strict for the context, either you have to enforce them with unreasonable measures, or people break the rules in ways that cause more harm than you were trying to prevent.