I agree with Marcia S that Nathan chose to isolate himself, and I don't think all small communities are the same in how they might judge people or shut them out, or for what. I also believe people are marginalized and judged harshly in larger societies, too (often unfairly based on preconceptions, maybe sometimes fairly based on something they did), though it may look less obvious than what happened to Nathan.
I do think that in smaller communities, for better or worse, it becomes more important for people to take responsibility for their actions, because even small actions can have a greater impact on the community as a whole. It also becomes more important for shared values to exist between community members.
I don't think I would like to live in a place that was too small and isolated, but this has more to do with the isolation than the smallness of the place itself.