Though there is generally a correlation between brain size and technological advancement, it's not always that certain.
We measured each other's skulls in Osteology, and found the difference in brain case size to vary greatly, even in a small group of about 24 students, with the largest being about 2200cc and the smallest about 1500cc. Ironically, the guy with the smallest brain case was getting A's and the guy with largest brain case C's.
There is a correlation between the ratio of brain to body size and intelligence. Large animals like elephants and whales have large brains compared to humans, but small compared to their body size.
Also, I'm guessing that the ancestors of these little folks started off bigger, and because of their environment and isolation evolved into a smaller and more efficient package, including their brains.
Here's a pretty interesting discussion on brain size.
link
Peachy Carnahan: Billy, why is the ball so big?
Billy Fish: Size of ball all depends on size of man's head. Big head, big ball. Little head, little ball. This Bashki man, big damn head.
