It's just a matter of perspective. Mountains look smaller over larger distance but it is clear that the island is not really that small. I still think that Onigashima is still larger but completely nuking an island - which was even engulfed into the explosion - is still a huge feat. Especially since it also means that Imu could easily nuke islands even larger than this one.
It is just the first demonstration of his power or the weapon he uses. They wouldn't rely on it if all they can destroy are small islands with it (again, I think Lulucia Kingdom is larger than most islands in Tottoland for example).
don't disrespect his greatness like that
