I know this much.... I am 85 and when I summon my warder, he is small. I cat shrink and he grows to proper size for my level. I think they made it summon in small on purpose. Doesn't bother me as I I use spell sets and shrink is one of them... Now tiny companion makes him tiny.... Yes
I'm pretty sure this is a bug. I've noticed something similar to this as well, your warder is likely appearing larger to other people than you. My race is ogre but when I illusion to froglok lets say, I become froglok size.. right? But when I shrink I become larger, then if I shrink again then I become smaller. Also when someone zones in after me and sees me as a froglok I am a froglok that is the size of an ogre. But anyone who was in zone when I cast the illusion sees me as a normal sized froglok. This is the same issue that warders are having I think.
I'm not sure if this is correct, at least for me. I box using ALT+TAB to switch, and my warder stays small to either of my avatars. I had him as large as a horse once, but cast tiny companion on him and every since, he is a small tiger. This works for me, because big avatars that the computer controls can get in my way. *Just watch your stupid tank mercs. They ALWAYS get right in my face and I have to move around to see the mob.
I am not sure if this "feature" is just for WoodElf Beastlords, but I noticed that, at least at the lower levels (35-), the WE warder will actually GROW when you cast Tiny Companion on it. It also seems to stabilize the warder so that it does not change size when zoning.