That play are is NOT too small. If a parent said that to me it would concern me. I think a lot of parents who let their kids run all over the house wrongly assume that a huge, enormous area is what a child needs. Nope, what a child needs is a well-organized area wherein they understand that it is THEIR area to play and do what they like. An overly large area just causes chaos and lack of adequate management, IMO.

Besides, centre daycare (in Ontario) only requires 35 square feet of indoor space per child. So, five kids in Ontario would equal 175 square feet and that includes eating and washroom and changing areas etc. And my guess is your kid use other parts of your home for eating, washroom etc than just in your playroom.