“Tires with a smaller diameter have a higher rolling resistance with the same inflation pressure, because tire deformation is proportionally greater. The tire is flattened more and is “less round”.”
This only means that smaller diameter tires need higher inflation pressure for the equivalent rolling resistance (or rather, deformation). That only becomes a problem when you approach the limits of the material (eg. you can't inflate it any more).
“Tires with a smaller diameter have a higher rolling resistance with the same inflation pressure, because tire deformation is proportionally greater. The tire is flattened more and is “less round”.”