A small team cannot match the output of a large company, and pretending otherwise helps nobody. Its advantage is fewer handoffs. The people making product decisions can work directly with the people writing the code, and the team can choose a narrower problem to solve well.
Fewer layers, clearer ownership
A product decision should not have to pass through five departments before it reaches the interface. In a small team, the same people can study the problem, try an answer, build it, and see what happens after release.
That does not make the work casual. It makes responsibility harder to hide.
A smaller surface area
Small software rarely needs to do everything. Clear boundaries mean fewer settings and notifications, with less room for the user to get lost.
The difficult part is saying no early enough.