Smaller cell allows for smaller current, which is better because can lead to less Cell overpotential after periods of charge or discharge, side reactions, etc.
Small cells have more homogeneous internal temperatures and local state-of-charge due to smaller overall currents. Therefore, Small cells are less susceptible to Lithium plating than large cells.
Smaller cells require more circuitry and control in the battery, more room for imbalance.
Voltage and current cannot be measured on every small cell in separation, therefore only on a group of cells connected in parallel. This makes spotting the onset of thermal runaway or rapid cell degradation in a group hard or impossible. See Reasons for atypical cell degradation, ‣, Positive feedback loops of cell degradation.
Smaller cells are better for production yield.
Large cells have a lower internal resistance.