One reason for the small cups is because they're better for taste and appreciation of fine quality teas. When brewing tea the traditional gong-fu way, the general rule is, more leaves, less water, quick infusions. ... The small cups allows you to really appreciate the taste and flavour of each stage of the tea.
Why are some teacups so small?
Short steeps ensure the tea is still hot when poured, while small volumes allow the tea to cool quickly for drinking. In many ways, small pots simply allow for more precision in the brew, since the water is infused with flavor more quickly, and can be drained from the leaves all at once.
Why are tea cups smaller than coffee cups?
Coffee cups are more narrow and mostly straight up. Teacups are lower and wider and often tapered down. The reason that teacups are wider at the top and more shallow is because a good tea is set with BOILING water. The bigger surface lets your tea cool down faster, to a consumable temperature.