DS9 over-inflated everything.
Not really. The big thing they did was use old ships. The federation has a 150 species, thousands of worlds covering a massive area. TNG stated they could replace 39 ships and 11'000 people in just 12 months. Really do the basic math here. You need hundeds of ships just to patrol the space you hold. Mich less expand out and do the other stuff Starfleet does.
If the TOS federation is a 1'000 worlds. How many ships would you say are required to keep it safe and well patrolled?