It's not at all cruel to keep your cat indoors safe from traffic, with plenty to play with, plenty of love and company. You said yourself he seems really content and is happy to stay inside. You have absolutely nothing to worry about!! Keep him in where he's safe and happy.

If you think about it, cats are the only animals that we send out unsupervised. I think many of them are perfectly happy to be home-bodies. I know my cat won't go outside for love nor money!

I think the only time that it would be "cruel" to keep a cat indoors, would be if the cat was used to being allowed to roam a large area, and its owner decided to lock it in the house and keep it there against its will for no good reason. But that certainly isn't the case here, so don't feel bad.