But what’s the difference grammatically if there’s a space or not? Let’s take “streetcar stop”, although there is a space there, what function is “streetcar” performing other than being a noun? It’s not an adjective, you can’t say “that stop is streetcar”, that doesn’t sound right, you’d have to say “that stop is /for/ streetcars”.
So I would argue that “streetcar stop” still parses as a complete compound noun grammatically. This is just a matter of orthography in my opinion. German may more readily “freeze” compound nouns and put them into writing as a single unit, but both English and German are full of long ad hoc compound nouns.
The difference is for the German compound word you only have to remember the endings for the last part. You don’t need to worry about adjective declension. So yes it’s a real grammatical difference and not just whitespace differences.
I think the difference is that in English you can create new nouns by simply lining up existing nouns (with spaces in between). Over time these words may or may not grow together.
In German, you would have to create a single word from the start (possibly using a hyphen for disambiguation) and in some cases pluralise individual words so they can be joined together.
But you are right that in both cases the result is just a single noun, which contrasts with agglutinative languages such as Turkish where the entire grammar of a sentence can sometimes be packed into a single, potentially very long, word.
We (my first language is Norwegian, German is my 3rd, so I'm speaking mostly from my experience with Norwegian) tend to see it as far less of an act of "creating a word" than English-speakers tend to when confronted with our languages, though.
English speakers are often amazed at how we "have words for everything", which makes it seem like it's been some conscious act of establishing a new world on purpose. Of course sometimes that is the case, but that process happens in English too.
But exactly because of what you say, directing that amazement at us just combining words is pretty much the same as if we expressed amazement at how English has sequences of words for everything.
It just looks different to English-speakers for whom the merging of multiple words into a combination they've not seen before is not a frequent occurrence.
So I would argue that “streetcar stop” still parses as a complete compound noun grammatically. This is just a matter of orthography in my opinion. German may more readily “freeze” compound nouns and put them into writing as a single unit, but both English and German are full of long ad hoc compound nouns.