I support Finland in international football. We have almost no chance against the top teams, but I was really happy to see us take part in those one European championships. If we made the World Cup, I would be over the moon. There is something to be said about growing the sport and getting better by facing the best.
Think about the lower end teams and their fans; they are unlikely to be unhappy about losing badly to the top teams; most likely just happy to have a chance to play in a high level tournament, and have close games against the other non top teams. Many people were against increasing the number of teams in international football too, but few complain about it now that it has happened.
Plus surprises and upsets happen, and cheering for an underdog can be exciting. Even those blowouts can be an entertaining showcase of top end hockey skill from the top nation, I disagree about them always being unwatchable garbage.
But still, 16 is probably the maximum amount of teams for a sensible tournament system. 12 is also fine. 8 or 10 is a bit few because of some nice teams missing, and the 4 team tournament we will have is very disappointing. (But understandable as a kind of warm up for the Olympics).