In the first case, for example a roving band of stone-agers, say N = 30 with all males related and everybody knowing the leader. Which is good because whatever the political system, leadership entails consent of the led. But bad because the leader knows everyone so it's harder to act or think differently. Errors in understanding the world are firmly entrenched.
The second case might be for example a modern state of N = 100M, with IT. There are notional leaders but they are partly controlled by unseen oligarchs, possibly residents of other states. The bureaucracy and businesses collect and sell information about everybody. Voting, if it exists at all, generates little consent, since only a negligible fraction of people know the official leaders, let alone the oligarchs, let alone what sort of decisions will be consequently be made.
The ideal is therefore presumably where N is some fairly low multiple of Dunbar's Number. But even if we wanted to we don't have the technology or knowledge to implement this yet.