My reading of your simulation results there was that the conclusion was exactly opposite of the thread title. I.e. if other factors are kept equal (tire width, construction, and pressure) then the smaller diameter tire will have a harsher ride. Only by compensating for this inherent property through the use of either wider, lower pressure tires and/or by introducing some type of suspension can the ride of the smaller-wheeled bike be made equal or even less harsh than that of a bike with larger wheels.
As I said above, I find the ride of my Bike Friday to be perfectly fine and about the same as my regular road bike - but that's only when I run wider tires on it. When using the tires with which it came (25mm, 100+ psi) the ride was harsher. And in comparison to my 700c touring road bike with 32mm tires the Bike Friday still has a slightly harsher ride. Nothing surprising here - smaller wheels tend to give a harsher ride and wider, lower pressure tires tend to give a softer ride. So I'm not at all surprised by your simulation that one gets about the same ride with 16" wheels using fat tires that one does with 700c wheels with skinny tires.