Is it okay if a PhD student's work seems insignificant compared to others'?
It is entirely normal that beginning students would achieve incremental results that compare poorly to the best papers from the best researchers in the field. Sometimes researchers need time to mature, and sometimes research directions just don't pan out even for the best of us. Not every worthwhile paper is revolutionary. 

That said, it's impossible for us to tell whether you should be concerned or not. It's possible you did everything exactly right and this is where the science led you; it's also possible that you did not. The person best suited to judge this is your advisor. Since your advisor wants you to publish, it would seem that they are not too concerned. Still, asking them for feedback is likely a good idea.