Why do you think that small blocks prevent it from being centralized? Nothing changes if the block size was upped to say 5MB.... just because the block size is 5MB doesn't mean it's going to be used in full every 10 minutes.
Not everyone is running their nodes on high-end professional PC's, some people use old laptops, ancient PC's, Raspberry Pi, and other low-power devices. When the blocksize gets increased, you need more storage, bandwidth and processing resources to deal with blocks, and it starts to slowdown the whole system to the point when it gets quite annoying. Many people would abandon running nodes as the result.
