I'll post my experiences here.
My car has 18's as standard with, as you'd imagine, fairly low profile rubber. It rides nicely but, being a sport, on the firm side - which I like.
Recently I took these wheels to be refurbished and was loaned some temporary wheels. These temporary wheels were still from a C-Class but were just 16" with taller (but narrower) tyres to maintain the same rolling radius.
Right away I noticed that the ride was smoother, the car soaked up the tiny imperfections in the road more readily - was really quite pleasant. The down side however was that even in moderate bends taken at "normal" speeds there was a LOT more tyre roll, causing the car to feel a lot less planted. Now, I'm not hooning it here, just pottering along as I usually would.
Additionally, despite the smaller tyre technically having probably a slightly larger contact area (narrower but extra squish made it longer) traction felt slightly worse when putting power down in a straight line. During cornering, the tyre roll seemed to add to this.
So, with all else being equal - it was the exact same car, just different wheels and tyres. I'd say the smaller wheel, with higher profile tyre, can make for sublime comfort in a straight line, yet a much less planted feeling during cornering as well as less outright grip - though tyre compound and tread pattern differences might account for that of course.
I suspect car manufacturers could readily design cars with smaller wheels with the same handling characteristics of the larger wheels we're accustomed too. However, I still think they'd need to be fairly low-profile to replicate that planted feeling in bends. Of course styling and aesthetics are a major factor too, but of course very subjective. I personally like larger wheels, though equally I thought the car looked good on the 16's too - they were MB multi-spokes - though friends of mine thought it looked quite comical lol.
Was being driven around in a poverty-spec S-Class recently (poverty-spec and S-Class together lol) which was riding on large 19" wheels but the tyres looked far from "low profile" at least compared to my cars. As you'd expect, the car rode lovely but, once again, cornering even fairly modestly would exhibit tyre roll you could feel.
I'll add that tyre roll isn't necessarily a bad thing, if the car is still planted it's fine when you get used to it. However, coming from my car then having the same car with taller tyres and being in the S-Class, it really didn't feel so planted to me. Weight is of course a factor here too, MB's are heavy, my old Mazda 323F from years ago - running on 13" 165/65's - was under 1,000kg so while it certainly had tyre roll it wasn't as noticable. Note that at the time I was also running an Impreza on 215/45 r18's - quite the contrast, yet the Mazda did not feel that bad in bends by comparison as it was light and designed to run on those 13" bubbles
Interestingly, when I was spec'ing up some Winter Wheels and Tyres I chose to go 16" for the ride quality as well as other factors. Sadly I was unable to make the purchase in the end due to several reasons, but smaller wheels would still be my choice now when combined with winter tyres - plus it's cheaper!
Scoob.