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Agreed. The only thing to add to this is that government systems are voluntary and propped up by the people. The reason our current system actually works so well is because there is already a strong sense of local governance and accountability albeit on some rails. Each state defines the types of organized entities that if will sanction. In NJ for example, we have townships, but you could also register using other systems like village, etc. If they wanted to appease the libertarians a little, they could potentially allow for that experiment to exist in the same way that Indian reservations are their own systems.
People have effectively set up libertarian reservations for themselves. It never goes well.