Why haven't small wheels caught on?

For me, the reason I got rid of my small wheeled folder was the issue of flats. A bolted on three speed hub is a nightmare to fix a flat roadside. For a third the cost of something like a Brompton I can get a decent commuter with quick release axles.

Griff500.
Look my broken English hard to understand.
Like what you wrote regarding easy long ride stick with 700c.
My thoughts. They track better. Their angular momentum assists their tracking because they resist forces such that their momentum/inertia remains as such. Larger wheels do this better than smaller wheels with identical parameter point masses. This inertia/momentum holds true when cornering when side wards forces tempt the tyre to skid yet the wheels momentum resists such with it's response such as no thank you because I'm travelling this way.
Although smaller the wider smaller wheels might weigh more thus increasing their momentum yet the translation at the fulcrum is from a narrower radius and being a measurement of square that has a large effect on the wheels inertia; the wheels want to maintain track. The side wards temptation to skid can be reduced by increasing grip which is often found using wider tyres.
I can't write plain English, been awake 20 hours.
Would you trust 28mm tread on a 20 inch coming down grade through sweepers?
Hence just typing too much, smaller wheel need more grip.
I think the Moulton looks fantastic as a comfortable throw in a car and drive half way and ride any road with because (I'm guessing now) the tyres are wider.
Looks great per that aspect of cycling. Eg. Storage, easy to ride, stronger wheels? Comfortable ride on wider tyres, light weight, transportable, list goes on.
I hope I helped. I had a similar argument with a racing car manufacturer many years ago. 20inch vs 700c. End result. Stiff ship enjoy what you use. Self preservation might be key factor as to where the bikes get ridden.

My tuppence
I was given a test ride 6 weeks ago on two Moultons. We rode from Bradford on Avon to Bath and back using the canal path and two tunnels and part by road. What most impressed me was how unshaken I was after going over a pothole. To test this I then spent some considerable energy hunting out the largest potholes and cycling through them. The result was remarkable comfort which only those who have ridden a Moulton would know. My comparison was my Giant Defy with 700c wheels which certainly jolts you if you happen upon even the smallest pothole.
I am not saying buy a Moulton every time just expressing, through experience, one aspect of exactly what you can expect from a Moulton.

Twenty.. Twenty five years ago I was riding a lot. My mate 'the flying Flea, ' was a bright bloke with not much formal language training.
He was going on about fitting drop bars to a mtb and commuting.
His old man was pretty stoked with his hybrid (wide 700c) ride. Being young I declined the challenge because the tracks we rode would destroy 700c rims and the road time I might as well stay on a mtb or bmx and find a thin wheel roadie because his hybrid was just too slow.
Anyway, years later and budget minded, just about to finish my build of a dropbar hybrid (common now aka gravel bike). If my body was smaller mtbs would work well.
From experience, bmx 24 inch would stay true after 10+metre jumps, mtb 26 inch would survive 10 footers and 700s were crap unless wanting fast on a flat track.
They're all good, thank you much regarding moulton as I never knew these existed. An old friend is looking at bikes and was considering a girl frame to ease entry upon. I'll be informing him that Moultons exist. Glad to read that they ride nicely.

I like big and heavy wheels. I feel much safer on bikes with such wheels as they are more stable maybe to the gyro effect but I don't know the exact physics.

When riding a bicycle with smaller wheels, it feels as stable as riding a 700c bicycle at very slow speeds in terms of being easy to balance.

There's three main reasons imo why small wheeled bikes have a bit of a bad/niche reputation.

1. most small wheelers are folding bikes and are either cheap heavy and crap, or expensive like Birdys, Bromptons, Moultons. Most who buy small wheeled folders do so for short hops from the train etc, or from the car boot, so buy cheap uns, then complain how they are rubbish.

2. UCI etc regulations banned small wheel bikes from competition in the 60s, which is why "racers" are basically fixed around the same 27/700c size. Mountain bikes came from cruiser/utility cycles which tended to be 26" although still derived from the UCI biggish wheels and 3 stick frame basic design. It's diversified a little but stayed roughly the same. So that's what is in the shops.

3. Raleigh. Moulton basically invented the small wheeled bike and it was almost perfect. It took all the skills of Raleigh to strip out the suspension (which made the head tubes fail), replace with stupidly fat bouncy draggy tyres. They sorted the frame out by using offcuts from north sea oil rigs.  

I've ridden Moultons for over 20 years and love them to bits. The design makes them a bit love hate though. They are the stiffest frame I have ever ridden, but the suspension makes them feel compliant and comfortable. It's like riding a velvet covered I beam. Besides the ride, I find the actual design appealing, the horizontal cross member is just the right height to carry and is the CoG. the racks are designed to keep the luggage suspended and centred on the CoG again, and unlike most folders the ride is not overlly twitchy or cramped unlike a lot of other small wheeled bikes, although they do handle quicker than a big wheeler.  

They are superb allround bikes, and excellent for all day riding, and mixed surface riding and  commuting. The only thing they don;t like is soft surfaces like, deep mud, sand or gravel. 

I can easily fit the same width tyres to my Moulton as I can my conventional road bikes and be as quick, or wider knobblies for off road riding

Moulton was the first to put a full suspension MTB into production with the Moulton ATB. The design of which evolved into the Moulton APB and then the TSR.  The design may seem dated against todays moulded carbon bikes, but they hail from a time when the only alternative to steel was thin alloy pipes glued into lugs.

Moultons have held many speed records, and are used successfully in Triatlons.

My Moultons weigh pretty much the same as my 531 conventional tourer.