I'm not sure strategy has a lot to do with it. I think it's pretty hard to make a switch to medium or large these days. Gyms just don't have the same number of worlds level athletes as they used to. Between the minimum age increase and new athletes joining at a much slower pace than athletes leaving over the past several years, it's a struggle to field a senior team of more than 24. Gyms are forced to go XS or small or keep their aged out senior kids and go open. I personally don't care for the look on the mat of teams with less than 5 stunt groups, but it is becoming the norm. I'm not sure you will have more than 10 teams in any of the medium or large divisions this year and that's a shame.
I would agree, except event producers say they have roughly the same number of athletes at events, just on far more total teams. (the same size pizza, just cut into more pieces). This effectively increases the cost per athlete for events AND gyms, which isn't helping our cost issue.
To me, it is more about the fact that your athletes #23-30 (or #31-38) have to be really strong to be competitive. That is what is so challenging about fielding teams in those divisions. The purely ratio scoring means that if you have 20 really strong athletes, 10 medium strong, and 8 kids with most, but not all, of the skills, you have a hard time getting high scores as large. Going medium (with a small L5 team) gets you higher scores. Going XS (with a Medium Restricted/L5) team with those same athletes gets you the best chance for a bid.
Basing your score on the "average" ability of your athletes, rather than some cumulative score for difficulty puts a downward pressure on team sizes. This is also true if deductions stay absolute while rewards are relative. Those aren't the only factors affecting team size by any means, but they are there and they are persistent.
Also, for better or worse, what qualifies as a "worlds athlete" has gotten much higher over the years. In general, the skills are much harder than they used to be and kids that would have made an elite worlds team EASILY 10 years ago are not making the floor now.
Aside:
I don't think I have explained my issue with absolute deductions when using relative scoring very well in the past. To me, a better way to look at it is this: If you have two different-sized teams, and both have 90% doing the elite skills for their level, should they get the same difficulty score for that section? If those same two teams both bust 10% of their standing backs, then they should get the same points taken off in deductions. (Traditionally, the larger team has gotten far more points deducted despite hitting the same (or higher) percentage of skills as the smaller team.)