No, I'm not confusing anything. It has to do with differential pressures, regardless of pitch, etc. Also, it does have to do with both airspeed or static speeds as you have to put those into the equasion to figure either 'ideal efficiency' or Froude efficiency. In a nutshell, the less pressure differential across a span the greater the prop efficiency. A smaller blade has a short span which increases the differential, and smaller blades generally turn faster with higher differentials. Both bring the efficiency down for the prop.

This is actually on the subject for this thread because 4 strokes are often chosen to swing larger props.