Small can be good but it can get to be a problem when it gets too small. A lot of the tiny homes seem to rely on a balcony and a ladder to have a bedroom. That might be fine for someone in their 20's but put an extra 40 years on there and it's a recipe for a night fall while trying to get to the bathroom and a ride in an ambulance to repair a broken hip or leg or whatever. Even if a disability is only temporary, could a person get around in a tiny home with a wheelchair? a walker? even crutches? (I broke a leg very badly back in 2015. It gave me some perspective as it took quite a long time to heal. I never realized how much of a challenge a simple step could be in some situations.)
More on the preference scale, is there room for the things that you want? Sure, we might be able to get by with only 2 or 3 outfits, but do you really want room for a decent wardrobe? It takes a little space. Do you want to be comfortable bathing and dressing? It takes some space. Do you want to have people over for dinner, or even have family over for the holidays, maybe even to stay overnight, and like it when they stay with you? It takes some space. Do you like to sit around after dinner and play table games? It takes some space. Do you like to be able to entertain 5 or 6 or 7 or 8 people and expect that they'll be comfortable, as in having a comfortable chair to sit in while they visit, even if it's cold and rainy outside? It takes space.
Hey, if I were a single guy and it was only me and I never had company, I could be quite contented in as little as maybe 250 square feet of decently laid out space. However, living with my dear wife, 250 square feet is pretty tight to be comfortable in. We did that for a year, lived in a travel trailer of about that size in our driveway while we rebuilt our house after Hurricane Katrina. We were OK. Cramped, but OK. But my dear wife loves to have company over. She loves when the kids and grandkids come to stay, maybe for a week at a time. She loves the big family meals together, sitting around playing games at the dining room table, being able to relax on the living room furniture for long talks or to watch a movie, just hang out. So space is kinda important to us, not so much as a need but as a want. Everybody kinda has to figure that out for themselves and there is no right or wrong answer that fits everyone. It can even change over time.
Sorry... I'm rambling... just sharing the thoughts passing quietly through the gray matter.