What is the benefit of under-sizing a frame and making it up with long seat post exposure/longer stems? Is it weight? Is it a geometry thing (better aerodynamics thought smaller angles?)? Both?

not sure. I like my frames bigger.

Weight and a little bit more responsive handling if you can handle it. Aero probably as well since you'll be able to have a larger seat to bar drop. But in the end it's whatever you feel more comfortable on.

Edit: It's always easier to make a smaller bike fit than a larger bike.

Fit/aero/power/position

care to elaborate?

Bike is slightly lighter.

Bike is slightly stiffer.

Bike has a shorter wheel base and therefore handles quicker.

I read a quote I think by Ernest Colnago that smaller frames with a long stem puts more weight out over the front wheel, which in turn makes the bike corner like a Ferrari. I took note of it as I learned a while back my bike handles better in turns racing if I shift my weight forward as I enter turns.

makes sense. would something like this be worth investigating? I'm a cat 5 crit racer not a World Tour stage racer, but I like the idea. Would the only drawback be overall comfort?

If you fit it right between limits it would not be uncomfortable.

Do you find that your bike handles better in turns out of competition as well?

The main advantage is that a small frame lets you move the handlebars lower. If you have the right physical abilities, that can give you better aerodynamics and better power. If you've been watching the Tour de France, you probably noticed that most riders have smaller frames and at most one spacer under their handlebars.

I have in the past, but here's the Cliff Notes version:

- Fit, because of varying body types. To achieve the same torso angle (which is applicable to aero and power), two riders of the same height might need significantly different cockpit measurements/saddle positions, and often different frames. A rider with longer arms might do better with a smaller bike. Riding style has a lot to do with what will work for a rider, fit-wise (...and I'm not just talking about faster/slower when I say riding style).

- Aero, because a lower position almost always creates a smaller frontal area, which is typically more aerodynamic. Since wind drag is a key factor in overall resistance, aero has a great effect on efficiency. It should also be mentioned that for most riders/riding instances, the rider is the least aerodynamic part of the rider/bike combo.

- Power -not because the being lower necessarily gives the rider more power, but because a shallow torso angle gives the rider more leverage on the pedals, so that they can move more efficiently. Also, a rider makes/sustains more power if they are comfortable. When your torso is closer to horizontal, it helps to distribute road vibration more evenly across your contact points, rather than going mostly to your spine.

- Position. This mostly has to do with the aforementioned leverage, but a significant contribution is made to handling that is not often mentioned. This is because of weight distribution. As some have mentioned, greater weight on the front end helps the bike handle better. It's true, having a more neutral weight distribution does wonders for cornering, braking, and the riders confidence level.