Yeah the happiness generation is a bit too hidden you can actually generate a lot of happiness during the day, but since i provide no explanation for it i think it gets missed, the houses provide expansion slots after a day, the expansions provide a lot more happiness. This is a fault from my side completely making no tutorial. If you wanna have a another go at the game i would recommend a build order like this:
Build Order:
Day 1: Build 1 House,
Day 2: expand house with 1-2 wells, after this the game should become much easier.
This is an oversight from my side i greatly appreciate you trying the game and giving me honest feedback!