Well, it might act as a flywheel, but it's usually termed a freewheel. (Or more likely, we're looking at part of a freehub.)
The smaller chainwheel isn't so small. You need a small chainwheel or big rear sprockets or both if you (a) want to ride up steep hills or (b) are a weakling or of course (c) both.
Me, I'm (c). There are gradients of 18% (and even occasionally 25% or so) hereabouts, and sustained gradients of 10% plus. And I am enfeebled by a combination of age and a decades-long successful avoidance of any exercise whatever.
That is a mighty impressive dork disc, though.