If you consider how huge the web is then 23887 websites is not covering a small but a tiny part. Also the approach of maintaining such a list manually seems fairly uninspired.
If you just go by the number of websites, most websites are promotional slop though. The top 23887 websites that are actually good probably covers a large part of the subset of the internet that's actually good.
Anyway, Kagi Small Web is not a list of websites but a list of RSS feeds.
As a Kagi customer I have to say that's a disappointingly short list and static approach :/