It seems like he is using just group instances linked from another blend file. They are references that are updated when the original objects are updated, so you don’t need to model every tree or street on your scene, just the original objects.
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As you might see, in his 3D viewport all models are highlighted with “blue-lines” instead of “orange-lines”:
This indicates he’s using Linked instances, which are basically visual imported placeholders that are there for visualization, but not for editing (that you need to do in the original imported blend files). You link in objects by going to: Info Editor > File > Link or use the shortcut CTRL + ALT + O instead:
You can also use the BGE KX_LibLoad module to dynamically load in your assets at runtime: https://upbge.org/#/documentation/docs/v0.2.5/api/bge.logic.html#bge.logic.LibLoad
The Compress File setting in User Preferences can help achieve optimal file size as well:
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