This is exactly how I feel about these new divisions. I know that it's not necessarily a popular decision, but I think the ability of small/medium gyms to have this "waterfall" effect will make the sport stronger overall.
There's SO much pressure on small gyms to make a worlds team. Then when they do, (and I'm generalizing here) they're weaker, and we hear that they shouldn't' even be at worlds. By allowing an XS division, you're fostering the overall growth and development of the sport *on the whole* by letting small/medium gyms, that could be that size due to market size, compete without forcing kids up a level and being "that team" on the worlds floor that we all see struggle.
I don't like the idea of, too bad, you don't get to go to worlds then if you're not good enough. I do *not* enjoy participation medals, and I don't like everyone being a champion. But I don't think that a gym in the middle of nowhere with 12 super talented athletes should suffer, just because they're not in a populated area.