The more people who agree with a government the more representative it is of its citizens. People who live in rural Alaska have different needs for government than those who live in New York City or Dallas. On some issues those in the southern bible belt are more likely to agree with each other than with those who live in New England. There will always be political disagreements even in tiny towns, however lower levels of government are more likely to more closely represent their populace than the federal government represents the entire US. In rare cases those who have major disagreements with a policy are able worst case to at least more easily move to another town or state than to another country.
Would you expect to have more input in a group with 2 members, or a group with 25 members? Obviously with 12.5 times as many people you would feel you had less of a voice. The average US House of Representatives district is 12.6 times as large as the average state House of representative district. A state House member is in one sense 12.6 times more representative than a US House member.
Most cities are governed by some variant of a town council, however there isn't convenient data available on their sizes. Lets assume worst case there is just 1 official you elect for each town. The average state house district is 6.6 times the size of the average town. Huge cities are different (and are sometimes broken up in to districts themselves), this is just an average. The average town council is then at least 6.6 times as representative as the average state house (usually more since there are usually multiple council members). The average town council is at least 83 times as representative as the US House of Representatives. On average governors are 50 times as representative as the president. Town mayors are 720 times as representative as governors, and 36,080 times as representative as the President.
For much of this country's history most government spending was at the more representative local level until the first half of the 20th century. This shows the % of total government spending by each level:
The overall growth in the share of federal spending began after the 16th amendment enacting the federal income tax took effect in 1913 and was initially driven by two world wars. Spending at the local level didn't actually drop that much, it merely didn't rise as fast as federal spending. This is total spending per person, adjusted for inflation, for each level of government:
Rather than focusing most power and spending at the local level, the US now spends more money the further away you get from the local community. While the federal government spent $11,458 per person last year, state governments only averaged $5,048 per person. Local governments combined (towns, counties, school districts, etc.) together only spent a little more, $5,157 per capita, which means each type of local government entity spent much less than the states did.
Unfortunately this plays into the hands of special interest groups. A citizen concerned about government is more likely to go to a town committee meeting than to drive to the state capitol. They are even less likely to fly to DC. Corporate lobby groups in contrast prefer the idea of 1 stop shopping in DC. The federal budget is over a hundred times larger than the avereage state budget so lobbyists see a large potential payday for pork and favors they can seek efficiently in one place rather than needing to spread their efforts throughout the country. A small special interest group may be able to raise funds nationally for 1 fulltime lobbyist, but wouldn't have been able to raise enough funds in any one state to even get a useful part time lobbyist. A huge budget in the $trillions makes it easier to hide $millions in pork.
Special interest groups prefer federal elections to local&state ones since they can use mass media to reach voters cost effectively with less need to fund the sort of door to door campaign that volunteers use for their local candidates. Larger districts currently lead to more spending total, but mass media can lead to a smaller cost per voter for a special interest to be heard.
The rise in federal spending and power happened during the rise of national mass media: radio, television and even newspaper wire services and chains. The cost of creating national news stories is shared among all the local media outlets that buy it. It was in their interest to use more cheaper national political content and spend less on investigative local content. Perhaps the rise of the internet can eventually switch the balance of power back to local governments. It allows the rise of amateur local&state web/blogger journalists due to the low cost and effort required to distribute information since you no longer need a printing press and delivery trucks or a broadcast system. Citizens groups as well as government over time directly distribute more of their information and provide it through local news web sites that collect it in one place to provide each sides views directly unfiltered for those who want it (in addition to any added journalistic coverage of the issues). It cuts down the cost of each side of a campaign distributing its views via the internet.
An additional factor in the rise of federal power was the change to direct election of US Senators starting in 1913. Prior to that state legislators elected the US Senate and were motivated to choose people who would limit federal power to let states retain it. This approach may be more directly democratic, but it led to the less democratic result of helping to centralize power. US House distracts average far fewer voters than the whole state populations that vote for US Senators. The House was mean to be the "Representatives" of the people, and the US Senate the representatives of the states.
Changing the power balance would be more democratic and could allow better policy approaches to evolve.On many issues no one knows what the "right" policy approach is. What is "right" for one state may not be for another. We constantly get new and better consumer products because companies in a free market compete. Many people come up with new ideas and try them out and the ones that succeed spread. If we leave most policies and programs to state and local governments they can compete to discover what works best. Imposing a 1 size fits all approach slows down progress. It is more democratic to let each locale decide what its citizens prefer.
Some people are misled by the concept of "economies of scale" to wish to hand tasks to the federal government. The problem is there are also "diseconomies of scale". Even private companies that get too large become wasteful, despite competition providing them far more incentive to keep costs under control than governments have. Even states and cities can suffer from bureaucratic bloat, obviously the federal government is worse. If some states feel a task could be done more efficiently for a larger population, groups of states can pool their resources and collaborate "bottom up". Unlike a federal top down approach, this lets other states disagree and form different teams to compete. Federal programs can become slow moving dinosaurs that are so big they fail without competition.
Larger government entities are under less democratic control in addition to being less representative.