Why increase the number of cylinders in an engine instead of increasing their volume?
Constraints
Different applications have different constraints:

Aviation: very light weight, highly reliable
Marine: very high endurance
Automotive: moderately light weight, responsive
Motorcycle: very light weight, very compact, very responsive

Different technology ages yield different solutions due to additional constraints, always limited by the then contemporary technology:

Pioneer era: make it work
World War I/II era: as fast as possible
Post-war era: further, faster, better
Fuel crisis era: as efficient as possible

Aircraft Engines
The question is about the optimization of number of cylinders versus displacement volume per cylinder for engines used for aviation. This narrows the scope to “internal combustion reciprocating piston engines” (plus the Wankel engine as a very special case).
Obviously, rockets, pulse jets, turbine-powered,  and electric engines have no cylinders, and steam engines were never  (successfully) used in aircraft.
Number of cylinders and the cylinder displacement are two out of countless parameters that go into the design of any engine. Both may be used to increase the power output.
Power Increase
The power output of an engine may be increased either through the number of cylinder or through increasing the cylinder displacement (or both).
Each change of parameters causes the gain or loss of certain wanted characteristics. These are listed further below under (N), (n), (D), and (d).

Increasing the number of cylinders means gaining (N) and losing (n)
increasing the cylinder displacement means gaining (D) and losing (d)

Adding cylinders is easier than increasing the size of the cylinder. The cylinder geometry does not change. Identical engine parts can be used multiple times in the same engine design (cylinder banks, cylinder heads, or complete engine blocks).
Tradeoff shift
Starting from one engine configuration, the same power output may be achieved by

gaining (N) and (d), and losing (n) and (D)
or
gaining (n) and (D), and losing (N) and (d).


Reasons to increase the number of cylinders (N)

Torque directly scales with the number of cylinders
Increasing the surface-to-volume ratio is advantageous for air-cooled engines
Increase the power: Adding cylinders is easier than increasing the size of the cylinder. The cylinder geometry does not change. Identical engine parts can be used multiple times in the same engine design (cylinder banks, cylinder heads, or complete engine blocks)
Improve balancing of forces and momenta
Reduce the time between power strokes
Decrease the impact of a failing cylinder
Improve the flatness of the torque distribution over revolution speed.
Enable more flexible and more distributed form factor


 Pratt &amp; Whitney R-4360 Wasp Major, 28-cylinder, 28 l, 3500 hp, 2700 rpm, built 1944-1955.
Reasons to decrease the number of cylinders (n)

Simplicity: less moving parts improve robustness,  decrease the need for service, thereby increase the availability.
Enable a more compact form factor


Mercedes 1 cylinder, 1.5 kW, 720 rpm, 84 kg, built 1888.
Reasons to increase the cylinder displacement (D)

Increase power through torque


BMW IIIa, 6-cylinder, 19.1 l, 200 hp, 1400 rpm, built 1917.
Reasons to decrease the cylinder displacement (d)

Smaller displacement means smaller pistons, shorter rods, or both. Either way,  smaller displacement allows for higher revolution speed, and higher acceleration.
Smaller combustion chamber will decrease the time required for the flame expansion (gasoline only, not diesel). This allows for higher revolution speed.
The valves are limiting the gas stream into and out of the cylinder. The valves are subject to the surface-volume ratio. Smaller cylinders are easier to fill and empty through the valves, allowing for higher revolution speed.
At a given compression rate, smaller cylinders have to withstand less total force, allowing for a lighter engine structure (less weight).


JPX PUL 212, 1 cylinder, 212 cm³, 11 kW, 6000 rpm.

Notes

Radial engines belong to the WW I/II era. Most of them were air-cooled. For air-cooled engines, the surface-to-volume ratio matters. Therefore increasing the number of cylinders instead of the displacement per cylinder is obvious.

Aircraft during WW I/II had to be as fast and powerful as possible to attack and defend. There was no good reason to go for less than 6 cylinders.

Four-stroke engines perfectly work with 1, 2 and 3 cylinders. They are used powered paragliders respectively ultralight aircraft.

Certain cylinder numbers are more preferable to due symmetry reasons

6, 8, 4 for in-line engines
odd numbers (per row) for radial engines


Building radial engines with an even number of cylinders is well possible, albeit an even number in one row us not preferable. Multi-row radial engines with even cylinder number have been flown in many aircraft.

Automotive engine developers prefer 0.5 l per cylinder as ideal trade-off.

A high cylinder count would be necessary to build high power piston engines, but this segment is now occupied by jet engines.

Radial engines with less than 5 cylinders exist. Here is a radial 3-cylinder, built 1930 in the USA: