A small chip size needs a better lens than a larger chip size to produce the same quality image. All things being equal larger chip size is better.
for a comparison of image sharpness between 0.65" and 0.95" chips.
The reason for smaller chip sizes is purely commercial they are cheaper to manufacture, you get more per wafer. Unfortunately quality lenses are expensive so the end result is cheaper projectors but with less sharp picture quality, at least if you look very closely at the screen.
The difference between darkchip versions used to be the design of the chip. Amongst the things they have improved are increasing the pixel fill factor with each generation of chip, and increasing the amount the chip tilts and speed it can tilt at. These improvements produce a higher off chip contrast ratio. They have also altered the chip driver technology which has reduced the amount of temporal/spatial dithering a projector needs to uses with a high speed colorwheel.
(1992)B2 Chip 50:1
(1995)HH Chip 250:1
(1997)SRV Chip 400:1
New DarkChip4 upto 30% higher contrast than DarkChip3 depending on application
New DarkChip1 ?
Unfortunately they produced multiple versions of the same darkchip and now they have even started producing new chips and calling them DarkChip1 to distinguish them from higher premimum DarkChip4 chips. So it is difficult to tell what individual chip specs are.
DLP rear projection tvs use different versions of chips to front projectors, the chips used by rear projection tvs are cheaper and have one diamond shaped mirror per two image pixels, they rely on wobulation to produce 1080x1920 resolution, while front projector chips have square mirrors, one mirror per pixel, and do not use wobulation.