A smaller rim means a higher sidewall so more grip.
The tire can move more before it breaks traction and the car starts to slide.
On the downside you will have less 'feel' for the car because of the higher sidewall, so in fast chicanes the car takes more time to settle and transfer weight from one side of the other.
Another downside is you run a higher risk of overheating the tires and so have massive tire wear.
Because the tire can move more because of the higher sidewall it creates more friction = more heat.
So on a cold low traction track they could work great, but on a hot high traction track a larger rim with a low sidewall works better.