Ideally the PR is small enough to be logical as one commit.
Absolutely not. It's better to edit your PR to contain suggested changes in a clear, atomic history before presenting it for another round of review. Why would I want to present commits that "do the suggested thing" to the reviewer in the first place? That doesn't make any sense and it shouldn't pass the review.
Basically the trade off is, re-write history before review or after.
If you re-write before review, you lose some context about the evolution of the changeset - also the GitHub UI can get confusing (because some conversation comments will apply to commits that no longer exist on the PR branch). Keeping the pre-review iteration visible in the context of the PR can make it easier for someone else to come along and join the discussion later.
If your feature branches/PRs are short-lived, then the size of a squashed merge is still quite small, and the pre-review iteration is irrelevant. If for some reason the pre-review iteration is interesting, it's still there in the context of the PR, which is back-referenced from the commit message.
When I do a review this way, conversation history is retained and I can easily see the diff between rounds of reviews in the UI. I'm mostly using GitLab. Are GitHub's reviews really this bad?
When working on a project that maintains linear history, you should imagine your merge requests to be like patchsets sent via e-mail. If you send a set of three patches to Linux and you get some feedback in return, you don't reply by sending a fourth patch on top. You reply by sending a V2 of your patchset. Previous discussion is still there attached to V1, and everything is clear for both the submitter and to reviewer, and even to bystanders reading the discussion in future. That's pretty much what you get when you force-push an updated patchset onto your MR branch in GitLab.
> then the size of a squashed merge is still quite small
In my experience, only trivial MRs fit comfortably into a single commit. Usually a good MR contains somewhere around 3-10 commits. More than that and it's probably worth splitting to make review easier, less than that and you're into single bug fix territory where this whole discussion doesn't matter much.
> and the pre-review iteration is irrelevant.
Pre-merge iteration, either before or during review, is always irrelevant for the repository. It should only be retained in your review tool (GitLab does that well) and referenced in merge commit (after all, its whole purpose is to do just that and group commits together).