Its because they don't actually deal much damage and they don't have a huge blast radius. Would be disappointing if it let off a huge explosion but deal a minimal amount of damage.
They are more tactical then aggressive. Dunno if you've noticed but they inflict knockdown on nearby enemies, get a nade in a nice group of people and you've immobilised them for a few seconds. Could be the difference between you capturing an objective or not. Im sure if the grenades did 'big booms' then a knockdown is the worst of their worries.
I think the size of the explosion is an accurate representation of how powerful the grenades actually are.