Fast feedback
A team that works with small stories and finishes them in 1-3 days can get feedback from the Product Owner and stakeholders without waiting till the end of the Sprint.
Fast mistake correction
Most people remember the work they’ve done in the last 24 hours. If during this time they receive any comments from other team members, or some issues found, they will be able to correct things way faster.
Postponing less valuable work
When stories are properly sliced into a few smaller ones, the most valuable stories can go to the top and the rest may go to the bottom of the Product Backlog. This way, the team doesn’t waste any time on backlog refinement of something that has less value from the Product Owner’s perspective.
Better forecasts
Smaller items have less variability. Less variability means the team is more likely to be accurate in their estimate of how long an item will take to get to Done. With smaller items in the Product Backlog, the Product Owner’s forecasts of what can be released and when will be more accurate.
Risk mitigation
Better slicing means a more detailed analysis of the items. Thus, a big chance that the team identifies and mitigates risks that otherwise would have surfaced in the upcoming Sprint. As they say, being forewarned is being forearmed.