This is true even for bigger companies. As an example, let's say we classify engineers as SDE I,II and III and then have at least three sublevels within these which are not reflected in the titles. Engineers can negotiate on what level they think they should be based on their performance - as opposed to how much you should be making. Everybody at a sublevel makes the exact dollar amount +/- a performance bonus.
I worked at a company that did that and I found it much less awkward to negotiate during performance reviews (aka pay-hike talks).
Meh, job titles are just buckets. Comp is also a bunch of buckets.
Why should these buckets be necessarily tied in size?
Lots of flatter organizations have a smaller number of titles but larger comp buckets.
There is nothing necessarily wrong with this.