This drill can be used as a toughener and close quarters passing drill.
You could modify the rules to allow less physicality and or reduce it from 4 on 4 to 3 on 3. You could also change the number of passes required to win the drill.
I realize that this is not realistic spacing and probably not a good way to rehearse your offense, but there certainly is value in toughness with the basketball and getting open.
Another option would be to make the space bigger.
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Small Area Passing Drill
You can find out more about the Championship Productions video that this clip is from at this link: Toughness Drills to Improve Your Team Physically and Mentally