The answer, for people like me who want this kind of play, is to not have 99% of people speak Common. In my campaign, Common is the language of a continent-spanning empire that's falling apart. There are a lot of people who don't want to use it or teach it to their kids, for a variety of reasons. The further one gets from centers of Imperial power, the less of an expectation there is that people will know the language.
You also have 1000 year old elfs, teleportation circles and telepathy as well as well established Trade routes so why would a Common language not exist? It might have a range of dialects but long lived races probably means language chnge was so dramatic - eg apparently the Saxon Aenglish spoken in Wesex and Danish spoken by the Vikings was mutually intelligible.
Yes, that's exactly what I do
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If we're going for realism, languages specific to a small group (especially one that's isolated for whatever reason) would certainly exist - but anyone in that group who wants to do business with any outsiders (like a farmer selling grain) would also know the regional common language.
Tongues is not an adequate replacement for languages. First, it takes a 3rd level slot which is a valuable resource. Better to just speak the language and not need to use it up. Second, it only lasts an hour, which means that if you are in a prolonged interaction, especially one where you have to talk to someone in the morning, talk to the butler who arrives a few hours later to inform you of something, talk to people at lunch, talk to people later out on a hunt where an encounter happens, and then more at dinner, you're running really low on resources and probably didn't do much during that fight other than cantrips.
