you were told wrongI was told it was all about friction
The smaller the gear the more the chain has to bend and the more often each tooth is used.
The bending and doing it more often will cause friction more often and heat up.
Yes it reduces chain length and rotating mass.
With our jackshaft setup we used just 31 links of chain back to the axle and never a problem with it back to the axle.
Off the engine though was belt drive.
The extreme of small gear is with our 2cycle before having a jackshaft I think it was a 6 tooth on the engine we had to use and literally we would burn up chain and drive gear before the night was over.