Yep, "DLC" meant small because if it wasn't small, then it would have been sold at retail in a box, not as a download. The entire implication of the word "download" in the abbreviation "DLC" was that you were going to get something small'ish, much smaller than typical expansions or addons of the past. So small that you could just download it...
The downloadable-ness was never the focus of the abbreviation. The fact it was downloadable was just an indirect result of the fact it was small. But nobody would ever call it "SC" for Small Content, because that's bad marketing.