I don't know. I think the same objections about plausibility and probability apply. Of all the upper-class households in London, Oliver Twist just happens to break into the house of his long-lost great-uncle? Quasimodo and Esmerelda are switched at birth, yet just happen to cross paths later on in the most dramatic of ways, completely unaware of the secret connection between them? Unlikely connections and coincidences are the stuff of classic myth and melodrama, and seem to be what people are objecting to when they complain about "small universe syndrome."
"Wait. The villain just happens to be the hero's long-lost brother? What are the odds?"
This reminds me of a famous debate between Stan Lee and Steve Ditko regarding the secret identity of the Green Goblin. As I understand it, when it was finally time to unmask the Green Goblin, Ditko wanted it to be a random stranger since that would be more realistic (and less cliche) than having it be somebody in Peter Parker's immediate circle of friends and associates, but Lee feared that revealing that the Goblin was just some guy we'd never heard of would be terribly anti-climatic, so he insisted that the Goblin turn out to be Norman Osborne, the father of Peter's best friend.
Obviously, Lee got his way -- and Ditko quit in protest.
You can make a case for both arguments, but I can definitely see Lee's point here. Fiction is
not reality, and sometimes what works dramatically matters more than "realism" or "believability."