An organic society will consist of many societies. In a large area, statism is only implemented by force. I do not deny, even in small states, there will be criminals. A large state may have high taxes, paper money, trade restrictions, or even an evil guy in charge. Evil guys gaining power is not unusual if you look at the 20th century. Say an evil guy does come into power and begins implementing many restrictions. How do you avoid this catastrophe? This can be done by voting with your feet.
Meaning, move to a place that’s nicer to their people. That evil guy will only have jurisdiction over that territory. What if every state around you uses a commodity money and your territory uses paper? The other territories will trade among themselves because the one paper currency in a sea of commodity monies doesn’t have value. Of course, that territory can issue paper money, but issue and acceptance are different. The other territories can’t be made to accept the paper money.
What if this guy imposes trade restrictions? In other words, what if he’s a mercantilist? This can and does happen in large territories. In a large area, the standard of living won’t drop too low too fast. The people of that area won’t starve to death rapidly. However, if a small state did this, that standard of living would drop extremely fast, maybe the population would starve. Of course, the people in that territory will move to the territory next to it, which may be as easy as moving to the next town.
What if there is a murderer in power? If the territory is millions, the evil leader will have many to murder. If the territory is hundreds, the evil leader will have few to murder. In a large state, one may not be able to escape the murderous regime in power. This will be much easier in a small state. An evil leader is not beneficial in any way, but hundreds of deaths are better than millions. One of the ways Stalin attempted to dehumanize the scale of murder by saying: one death is a tragedy, a million is a statistic.
In small states, a statist territory can implement any policies they want. They wouldn’t have to worry about what the deplorables think. A small area essentially forces those in power to be nicer to their people. There will be a tendency to lower taxation, free trade, a commodity money, and fewer murderers in power. Unless they want to lose their population. As mentioned before, this is unlikely too for many reasons. Small states are extremely beneficial, except to those who benefit from large states, usually those in power.