Honestly, the whole bitcoin ecosystem is a sinking ship at this point. The protocol is broken and there are too many vested interests to properly fix it. It's time to move over to Ethereum.
Ethereum has been a beneficiary of that outflow, but is a significantly less tested code base, with much less hashing power, and significantly fewer users. Its still a very early product with its own vested interests. The two networks aren't even comparable at the moment in terms of capability and ecosystem.
Smaller block sizes are better for Coinbase, all else equal, because that means transactions on the blockchain are more expensive. Which makes sending payments on third party services more attractive, and long term they can flip bits around in their database while taking a cut, ala PayPal. Except the backing currency is BTC, not USD et al.
I think that Coinbase is primarily interested here in shepherding the Bitcoin ecosystem as a whole towards success, because it doesn't want the pool it's swimming in to dry up. Sometimes selfless and selfish motivations align.
This is fundamentally not at all how bitcoin works. Nobody relies on coinbase to actually use bitcoin. A bigger -maximum- block size won't increase centralization since 1 MB every 10 minutes is so far from stressing even modest resources. Anyone who can watch netflix can download at least 200 times faster than they need to keep up with the blockchain.