I read it and with a 500 population it can work. It is a bit of a stretch but it can work out if you take into account that about one and a half to twice the town's population live outside it. Dwarves are a bit away in the mine (where else could they be...) and the farmers and their workers would be in outlying farms as well as independent fishers that would live near the coast.
It would be a bit stretched but could still be believable. Add a very good smith living near a horse farms because he hates the mayor. A lone wizard and his two apprenctices living at the edge of the woods or marshes and a few other NPCs like that and the setting is suddenly very believable.
Let's play with numbers a bit.
First though, reading through the material on the town, Saltmarsh includes:
-3 factions (one secret)
-Prominent fishing families
-Prominent merchant families
-Workers
-Smugglers
-A senior town council member who owns 3 large fishing boats and is looking to expand the industry
-A wealthy merchant who "garners a great deal of support with the many feasts, entertainments, and other diversions he supports". He is a foppish dandy who enjoys "fine wine, good food, and the latest fashions" as well as a "patron of the arts and spends lavishly to support festivals, plays, and concerts"
-Smuggling operations sufficiently large that a bungled operation could land "a few respected people in jail"
-"Many" fishing boat crews, in fact, enough that it would take "several" going missing before the locals demand action be taken to figure out what happened
-"the town's various organizations"
-A full time town guard of 100 warriors
-A council member whose family has a trade cartel, and fleet of fishing boats, and several trading vessels
-Several popular fishing boat owners
-Can muster a militia of 500 residents
-A small force of marines
-A jail that can handle punishments including 2d10 years of imprisonment
-Docks that are "almost constantly busy" with two primary piers for large ships, and a series of smaller ones
-The capacity to build 6 new warships under a commission from the crown
All that is before you even get to reading through the key to the locations on the map.
Can we make that work with 500 people? Probably only 200 of them are adults.. Of those 200 adults, let's say only 10% are elders beyond their working years being cared for by their adult children. Now we're down to 180.
Those 180 need to accommodate everything above. But I'm going to pretend we're dropping the last zero on all the population numbers, so only 10 of them (rather than 100) are full time town guards.
Of those remaining 170 adults, we need to fit in all that stuff from before. Wealthy and poor families, prominent and less prominent. 3 large fishing boats attached to just one family, many other fishing boats (and I'm assuming that includes some other large ones based on context). We need to be able to build 6 warships in a reasonable amount of time, and that foppish dandy needs to be able to patronize the arts, etc.
This is not only not plausible for a town of 500, it is frankly impossible.