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Among other things, it has to do with the practical allowances for different communities of opinion, or factions within the polity. The smaller the group, the less opportunity there is for distinct subgroups to form, especially ones in opposition to others. There's also a more uniform experience of the polity that tends to shape opinion. The overall effect is that there's less variety of opinion, which makes direct democracy a closer approximation of the polity's feeling on something.

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