Before updating the size of the file manager windows might be smaller. The problem is more visible on the other skins, e.g. Arc Theme. It is a way to remove this restriction?
The minimum window size (910 x 640 in pixels) is now hard coded into Files as the result of a recent merge, so cannot be changed (except with a bug request, possibly). It was thought to be a reasonable minimum usable size and on my computer occupies less than one quarter of the screen (on Loki with elementary theme). If the window is appearing bigger with a different theme then something else is stopping it shrinking e.g. widgets taking more room - so reducing the absolute minimum, or making it a setting may not help.