What is the point of everyone being coected to an ISP?

I've heard that the Inteet exchanges packets by packet switching. But why does everyone need an ISP? Can't your router just be directly coected to your neighbour's routers and their routers coected to their neighbours, all doing the packet switching? In that case, only a few would people would need to be coected to some hub or backbone which would be the gateway to the Inteet outside of the neighbourhood. So why does everyone in the apartement individually coect to the ISP?