Monsters should not spawn during the night, everywhere around you. It's unbalanced, having a pack of zombies spawn right beside you... Especially in Hardcore mode.
So, what about having monster bases where they spawn & occasionally raid the player?
These could even be ruins left by the player. Let's say a creeper blows up a house you made & you decide to move.
And of course, procedurally generated ruins, graveyards, undead fortresses, villages that have been over-run & taken over by the undead, etc.
They should spawn both in day & night time & should not burn in sunlight. That system is old & stupid, it feels like a temporary patch to set things be & it hasn't been replaced.