For example, I used to work for a company with about 500 employees (relatively large by German standards) and now work for a competing company in the same industry with less than 150 employees. The core engineering team only consists of a dozen engineers.
The output is noticeably larger. The number of new features and especially the stability is significantly better. It is noticeable that due to the small team, each project has one or two "heroes". They are responsible for most of the commits and know the system inside out.
These "heroes" have been working on the same or similar systems for over 30 years in some cases and have experienced a lot in their careers. As such, they can bring experience and advice that is just out of reach for others.
Given the choice, I would always prefer a small team over a large team.