Practically speaking, small amps can be easier on the back if you gig, easier on the ears, neighbors, and soundman, can have exceptional and inspirational tone, are easier and cheaper to assemble and maintain, and are great for recording. Historically speaking, many iconic, small designs have provided the foundation for countless recordings that continue to stand the test of time.
What's your favorite small amp, speaker(s), and guitar combination, and why?
Princeton? Champ? 18W Marshall? Tweed Deluxe? Blackface Deluxe Reverb? Spitfire? Your own design? SE or PP?
I'd have to say, for me, a Tweed Deluxe with a Celestion Blue and a Les Paul is a pretty incredible combination. The touch sensitivity of the circuit, the warm, organic tone, the resonant pine cab (with a honey glazed patina on the Tweed), the clarity of the Blue speaker...really great

Also, the chimey, jangly, Voxy qualities of the 18W Lite IIb circuit with a 20W Greenback is hard to beat, and a Telecaster into a Spitfire head with a 1x12 cab with a 55Hz G12H30 Heritage is killer.