I believe it is true, and likely there exists a class of even smaller models than what they call "small".

You can imagine a reasoning model as a huge set of rules that generate the next statement from previous statements (written in context). In that sense, a reasoning model can be compared to a logical theory - you have certain deduction rules which can generate new judgments.

Often, logical theories are structured that the rules are remade into axioms, and the deduction rule is only modus ponens (which corresponds to function application and is a building block of program execution).

In the case of an LLM, the set of rules (or axioms) they have in the theory is quite large, but most likely semantically unsound (with respect to their their own representation of truth) - that's why LLM's make mistakes.

It would be desirable to break the logical theory represented by LLM into a smaller set of axioms, which would:

a) remove rules easily deductible from the smaller core of axioms (for example, LLM doesn't need to remember "Socrates is mortal", as it can derive it from "Socrates is a man" and "all men are mortal")

b) remove rules that have low value (facts that aren't used often or have weak validity) which cause ruleset to become unsound

I suspect that's what SLM distillation is doing, to some extent.

The question is, how far this process can go? I personally believe there is a useful logic for commonsense reasoning that has less than thousand rules (still several orders more than your typical mathematical logic, but orders less than SLMs). These axioms do not contain much facts about the world, but that could be added.

So I believe there is a sweet spot (deductive core, encyclopedic shell) which we have not yet found (it's a little bit more formal language than natural language) but is very efficient for general reasoning.