This small increase is annoying, but I'm mostly for it.

It depends on the person, but I personally can't stand the forced, over-the-top epicness in the Heroes mechanics. Thirty dragons, thousands of zombies, and one hero killing them all with a single wave of a magic wand. Now, at least, a leveled-up hero won't be able to kill dragons in batches, and his own strength will be roughly comparable to that of one dragon. Accumulating huge piles of units is completely unnecessary for a strategy game that emphasizes characters (role-playing emphasis). And, frankly, from a strategic point of view, whether you have 100 creatures or 10, they play almost the same, and if that's the case, why draw extra zeros? The case with Archdevils is special; they are presented as rare and legendary creatures and therefore have their own unique characteristics (no matter how many times you attack a stack of 1 dragon, it won't weaken until it dies).

Added 12 minutes later
Plus, there's a purely gameplay aspect, such as using single units. If you have a large army, losing a few peasants in a battle is like losing no one. But here, you have to think about whether to use single units, the loss of which is noticeable, or try to play for free on the survivability of high-level units, which is much more interesting.