There is nothing inherently bad about this design.
Demon's Souls, after the short tutorial area, starts you at HALF HEALTH for an entire level (one that's about roughly as long as Central Yharnam -- you do get a ring in that level that puts your health back up to 75% at the most but that's it), and forces you to beat the first boss before levelling up -- unlike Bloodborne which only forces you to have 1 insight you can either just view the first boss, or consume 1 Madman's Knowledge (2 of which are found in the starting level).
Demon's Souls's first level also has deathtraps that no beginner will ever not die of, should they choose to try their luck: the red-eyed knight in that one corridor, and the dragon's nest. If, like me, you got the game for Christmas during a Pure White World Tendency event (which I had no idea of at the time nor did I even know anything about World Tendency because, talk about obtuse systems, nothing beats that lol), you wouldn't have the dragons in that nest but you'd have that one side-area (normally closed in regular WT, open in PWWT) with tons of black phantom mobs + a really tough NPC enemy that would kill you over and over.
Instead of whining "I keep dying, this is bad design!!", I sucked it up, ran to my bloodstain and ran the hell away and decided to come tackle Executioner Miralda (and the red-eyed knight) later when I'd git gud. I didn't think Boletarian Palace was badly designed at all, I thought it was genius.
Honestly a lot of this is just bad advice, but no, the area isn't needlessly punishing. Because you don't need to do any of what people tell you, they're just suggestions for someone that's really struggling.
Actually there was also New Londo Ruins. And if you had the Master Key, there was Valley of Drakes + Blighttown.
Funnily enough tons of people complained about the beginning of Dark Souls, did you know that? How "badly designed" is this game that doesn't tell you where to go and can lure you into places where you're sure to die the first time?? How was I supposed to know I wasn't meant to be fighting those skeletons? I mean I didn't know it wasn't the right way, everyone said "this game is hard" so I thought this was normal! That stairs leading up to the Undead Burg is kind of hidden and not that visible right away, I had no idea I was supposed to go there! This game is so badly designed! (Real arguments people have made, btw)