I don't get why you need a smaller or round area to do that. Why is it hard to do close work in a large area? I actually start handling & teaching yielding in the paddock or a large area at least & only move to a small enclosure once I've established some good trust & understanding first.
I see where you're coming from. However I haven't used a round pen in a long time. I actually do all of my work in the large indoor or the large outdoor. But at the time, when I used a round pen, I found it more useful. I was learning how to lunge, I was learning how to read a horse. A smaller area worked for our purpose because after handling the horse, I could let them loose without too much space for there to be any confusion. When I did use them, I found the round pen useful. I don't "need" a smaller or round arena, I just preferred it at the time. Now that I have a better grasp of what to do and the horse understands my body language and what I ask (we have an understanding) we can flourish in any size arena with or without a lunge line.
I was taught in a round pen. I spent the summer days learning how to keep my body in line with the horse's shoulder and ask them to move on. That is where my trainer put me, until I had my own horse then I taught him wherever the heck I put him. I only went back to the round pen if there was a problem like bolting (my trainer made me ride in there until it was better) or if there wasn't any other space to work in (the barn we moved to was very crowded.) Anyway I'm not going to justify myself. My horse is structurally sound, mentally healed, he's very smart, and we are both fine. I do what works, not what other people like though I am very open minded.
Oh, but re people wishing they had a small area, for practicality, portability and cost, don't reckon you can go past a bit of elec fence tape & some tread-ins! We can all have a round - or square pen for well under $100 then.... so long as you don't live on rock or concrete anyway!
I board, I can't go building up fences and whatnot on property that isn't mine, so that isn't an option. I use what I got and I do what's best for my horse and myself. Maybe one day when I have my own property :)