As Brian said, compartmentalization. It does increase your 'hits to kill', but the real benefit is reduced size explosions when they are hit. The downside is increased cost per ship.
My design philosophy is to design a magazine that supports the salvo count I want a launcher to have. When you add a launcher you add a magazine. Counter Missile magazines usually have storage for 75 missiles at size 1, anti-ship missile magazines usually have space for 20-30 size 4-6 missiles.
Magazines for colliers I do differently. Those I make much larger since they are not intended to be in the direct fighting.
Are you armoring your magazines? Because if not, then the cost of 20 size-1 1HTK magazines appears to be identical to the cost of 1 size-20 1HTK magazine. In other words there is no cost savings. Again, if you're armoring up, the story's different.
[pause while playing with magazine design screen]
Ok, even with armor, it seems like size-1 is MUCH better to achieve the same HTK. First, the selector only goes up to 10HTK. So if you're at size 10 or more, it's impossible to get more total HTK than using an equivalent capacity of size-1. Second, the capacity for the same total HTK is smaller for a big magazine (and hence the cost is larger). I just compared 5 size-1 HTK2 (w/laminate composite armor, efficiency 90%) to 1 size-5 HTK10. A single size-1 holds 17 points and costs 1.61, so 5 of them hold 85 points and cost 8.05. The size 5 holds 70 points and costs 15.79. The size-1 magazines are superior in all respects.
I've decided to log this as a bug....
John