There is a lot of history here, JHouse. Audyssey has been fighting for a long time against the "small/large" nomenclature and how receivers configure bass management. Obviously, Audyssey espouses the idea that in any modern, digitally managed speaker system with a dedicated subwoofer, all speakers should be bass managed such that the low freq's get routed to that SW.
However, receiver mfgrs have long battled against consumer perception where people feel "less manly" for setting their big tower speakers to "small". One problem is terminological, in that the "small/large" decision itself is obviously a loaded term! (especially for men
) Chris likes to tell the story of how he has it on very good authority that the whole concept of "double bass" (LFE+MAIN) was created to appeal to the wounded egos of consumers who couldn't stand the idea of bass managing their manly powerful tower speakers
If Audyssey had their way, it would just be something like "Bass Management: Yes/No) or whatever.
Also, receivers have had auto setup programs for years before Audyssey came along. The way it works (as I understand it) is that the "measurement" block is separate from the "decision-making" block. You take the measurements, and it reports it to the receiver, and the internal logic of that block then makes specific decisions (distance, crossover, volume level, etc). The AVR manufacturers control the logic in this block, Audyssey cannot tell them what decisions to make (although they push for changes).
Initially, almost all AVR's used a default 80Hz cutoff in their internal logic to set the small/large distinction. So, you end up in a situation where even large bookshelf speakers are being left at "large" and not being properly bass managed. Audyssey fought this for years and finally (I think starting with 08/09 models) convinced Onkyo and Denon to change their decision point to 40Hz. This way, only the biggest tower speakers end up set as "large".
But, truthfully, there are not many consumer tower speakers that can truly handle sub-40Hz content with authority like a dedicated subwoofer can. So even if your speakers are flat to, say, 33Hz, you still really want to perform SOME bass management. At least, this is Audyssey's perspective. Thus, Audyssey recommends that, if you have a subwoofer, you ALWAYS want to manually change speakers to small if they have been set as large, and also tweak the crossovers up a bit if they have been set too low (40-60Hz).
Chris wrote a whole article on this topic: http://www.audyssey.com/blog/2009/05/small-vs-large/
So that's sort of the history of the tension... Audyssey has been battling to change these things, especially the confusing terminology, for some time. Unfortunately they don't get to make those decisions nor design the UI experience in the AVR. I'm sure if you want to ask Chris (or better yet, do some searches in the Audyssey thread using "advanced search" and looking for posts by "audyssey" on the topic) you will get plenty of info.