Sinatra is the most minimal web framework I've ever used. It's fantastic for doing quick mockups and small apps. Yes, you will hit limitations. Bicycles are not good dump trucks. And even before you hit hard limits, you're going to find yourself inventing a lot of structure/convention to keep it from devolving into pretty PHP.
Rails, on the other hand, is fantastically complete. It does everything for you. Convention over configuration is a brilliant concept, and the self-discovery nature of the ActiveRecord ORM is something that is totally natural in Ruby and quite awkward in other languages. For writing basic CRUD apps (which is much of the software world), it's really hard to beat the efficiency of Rails.
And when people whinge about performance... well, so what? Horizontal scaling, friends. Developer performance is much more important than software performance in most cases (especially since networks and databases form the bulk of your performance cost out in the real world). But efficient developers, that's magical.