To some extent, more people can make up for it. Eg if I go from 10 excellent artists to 1000 good ones, chances are that the top 10% artwork created actually gets better.
But eventually if you grow by lowering quality, then, well, quality drops.
I suppose for very small societies, they may be limited by discoverability/cliquiness and not quality, so their growth doesn’t mesh with quality and so they could also get better with size.
Note, “quality” doesn’t have to mean good/bad but also just “property”. When Facebook started, it was for kids from elite schools. It then gradually diluted that by lowering that particular bar. Then it was for kids from all schools. Then young people. Then their parents too. Clearly, it’s far from dying in absolute terms, but it’s certainly no longer what it initially was. To many initial users, it’s as good as dead though.