The game seems to have evolved from big alliances calling the shots to a more even footing between the big and the small. Now, we have alliances strong enough to be sanctioned, yet not big enough that have significant pull. These only have such pull because the big alliances aren't all that big these days. 400 members isn't all that many when put up against a force of 200 who are crazily active. Then after the large alliance gets walloped, they run away in droves and shrink to an inactive [i]and[/i] small alliance.
But the crucial thing is having raw numbers. Small alliances can be diplomatically powerful, but only when coupled with larger ones. When you and your 20-30 allies outnumber a group of say 10-15 alliances, you win your average war. I'm yet to see a large-scale war where the side that was smaller from the start has come out victorious in the end.