I know the XP per level is not linear, but the power per level is not linear either. I personally (as someone who is playing the EA solo and will be playing the game solo on release), feel like the balance would be better if XP was not just divided by the party size, because to me it feels like you gain far more power per level than if you just did straight division. I mean, think about it from the perspective of a caster. How many goblins would it take to kill say a level 8 wizard? The moment the wizard throws fireball, most of the goblins will be dead.
I play small parties because I like managing less characters, not because I want an easier game and XP division in most games results in a much easier game when you play them with a smaller party.
I mean, the difference in levels between a party of 4 and a party of 2 is not going to be that much, 1 at most. I don't think there is much danger of a smaller party becoming too powerful.
It's unrealistic that you'd face any # of goblins as an 8th level wizard (XP equivalent to a 4th or 5th level party). A more apt comparison would be facing 2-3 minotaurs. Do you think a level 8 wizard could easily kill 2-3 minotaurs?
And sure, you might play small parties because you like managing less characters. But I'm arguing that the game might be impossible to play with this lessening of exp for small parties. I'm not arguing that solo players should have an easier time than party-of-4 players.
Now, encounter balance is difficult, so you might be right. This is something that only detailed encounter testing can reveal.