Just like we keep underestimating the intelligence, abilities and communication skills of animals.

What does this say about us?

Depending on whose text you would want to use, the average male Cro-Magnon skull had a capacity of about 1,600 cc or perhaps slightly more.

Modern man has a brain capacity of somewhere around 1,350-1,400.

Neanderthal was probably slightly larger than that of the modern human.

I have not heard a good explanation of why this might be.

The size of the brain is related to body size, so women have smaller brains but they
do not have lower IQs than males.

Right we don't know exactly why modern humans have smaller brains than ancient man.
A lot of theories.

He writes at great length about the way in which humans have weeded out overly aggressive males, and he ascribes the smaller brain size to the loss of areas related to reactive aggression.

allowed us to sustain or increase intelligence in a smaller area.

I remember discussing this in anthropology classes regarding brain and head size, hip size, and bipedalism in human evolution.

Modern humans are born with more brain cells than we will keep. Some will form neural pathways that can branch out and connect with other neural pathways. The human brain goes through a synaptic trimming process of losing some cells. It goes on throughout our lives but there are growth stages when it seems more intense, if I remember correctly, e.g. age 6 and again at the start of adolescence. This does not mean that we lose intelligence or the abity to learn new things. Our brains become more efficient through this trimming, capable of gathering and storing information in categories that can interrelate with each other. This builds depth of meaningful knowledge instead of just collecting and saving random bits of data. It allows human metacognition which is the ability to plan and to take charge of our learning processes through self awareness of our thoughts.

During evolution, once our brains reached a certain size, it became counterproductive for the brain to continue growing in utero. A brain and its head that were too large would create problems in giving birth. The baby would die if the head could not get through the birth canal, or the mother and baby could both die. Once our ancestors became bipedal, smaller hip size was an advantage in staying upright. That created limitations on head size, too.

The more that our hominin ancestors encountered each other and interbred, the more that variations in head, brain, and hip size mattered. We evolved adaptations and mutations. The beneficial ones remained, giving us brains that self trim for both efficiency and increased thinking capacity.

So smaller brains in our very distant ancestors (Australopithecines and early Homo erectus) did mean lesser intelligence. But since the evolutionary process of the brain became more biologically complex with the emergence of Homo sapiens, brain size in our more recent ancestors (Neanderthal and Heidelbergensis) did not necessarily mean greater intelligence than modern Homo sapiens.