It's an interesting question, Binky. And it's one I've asked myself. I don't think Dennis Waterman is especially small.
Maybe the comedy, is that of a faded TV star, desperate to re-create the former success of Minder, is all the more funny if he is depicted as being execptionally small?
I believe that they have portrayed him this way as a reference to his huge ego. David Walliams actually approached Dennis Waterman about appearing on the show and Dennis Waterman would only agree to appear if they allowed him to write the theme tune!!!