If every tiny nation is defined by some ethno-national group, then what guarantee is there that I will be welcomed as a member of Ethnicity A in Ethnicity-B-stan? The idea of ethno-national states is one of the things that got us into this mess.

In addition, small constituency democracies can be tyrannical to minorities just as easily. The pressures toward homogeneity are even greater in such democracies. I don't know that 1,000 tiny states would improve the total level of democracy world-wide. A better solution would be democratic federations with robust democracy at every level.