That pic shows a bike set up for a low riding postion, aero without the bars. He can't use the hoods ( or they didn't back then due to the cables ). So is not that a small frame to enable him to have it set up this way?
Look at the distance in the Holdsworth photo between the seat and the bar height.
Not sure what point you are making here sir ? It's true, Merckx's bike is a racing bike and thus set up for a low profile position, most photos of Merckx show him on the drops or the tops. It's not particularly a small frame though I'd estimate 23" or maybe a tad more based on my frames and the size of the head tube. Merckx is about the same height as I am as this picture shows
Short seat pins and larger frames were faddish in the 1980s in the UK, certainly for less experienced riders, me included.
Between the the Holdsworth and Peugeot above, I would have my bike set up more like the Holdsworth if the frame size allowed it.
Here's one of mine
better, more upto date picture
and here's another
and another (the yellow one)