Interesting! It could be a confounder as well. For example, maybe people who live in dense (loud) urban dwellings also tend to have more day-to-day life stress generally, leading to reduced sleep quality. (Of course, reduced sleep quality could also be a source of more life stress...)

Would your userbase be up for a little experiment: adding white/pink/rainfall/etc noise at various volumes? I bet you'd see an inverted U shaped curve, with sleep quality increasing at relatively low volume levels, and then hitting some maximum and decreasing when it gets too loud! (Agree with other comments about looking at intra-night variance in noise level.)