The brigade isn't smaller but attrition has declined significantly -- they are thinking it may go down to single digits over the course of 4 yrs. Thus, it takes fewer plebes to graduate the same number of Ensigns four years later. So, yes, entering classes are smaller but graduating classes are not.
The downside is fewer slots for applicants. The upside is that, if you are appointed, you're far more likely to graduate today than 20+ years ago.