My house sits 5 spaces away from a cliff (meaning I could make a horizontal line of 5 flowers between my house and the cliff, for example). Knowing that a villager's house has a width of 3 (size is 3x3), can a villager move in between my house and the cliff?
After a bit of digging I found that... YOU will always maintain the shape of your house, no matter how much you upgrade it. You also have the protection of a 1x1 "No Build" zone around your house. Essentially it just means you need to be able to move freely in this area. VILLAGERS also need to follow these standards. They need a 3x3 plot PLUS the 1x1 free space around their home. So!
They would not be able to squeeze their house between you and the cliff because they do not have enough room due to not having the 1x1 "Walking Path" around their plot. I hope this helps!