I tend to think democracy is less about finding some optimal solution and more about finding a solution enough people will be happy with that there isn’t revolution.
Yeah, democracy may have a limited best case scenario compared to other forms of decision making, but in many senses it has one of the best worst case scenarios. More centralized power may be able to get more done, but historically we've seen it often results in decision making that is either just-plain-bad (when leadership is clueless) or which only benefits those in power, to the detriment of everyone else (when leadership is malevolent). Whereas democracy is slower and less efficient, but does ensure that most people are in support of the decisions being made
Democracy isn't about getting the best policy each and every time, its primary value lies in the fact that it creates framework that facilitates the peaceful transition of power and avoids the otherwise frequent wars of succession, purges, coups and whatnot.
democracy is not about decision, but decision making. during the process consensus is born and grown. it then generates mandate and enough political capital and willingness for consequent execution.
that being said, democracy often leads to wishes that nobody could execute. after all, it's about what participants want, not what they really need.
I don't think democracy is about increasing intelligence so much as resilience and escaping from failure modes. It provides a way to get rid of bad leadership, and it makes certain that huge issues are hard to ignore. In a pure autocracy a bad autocrat is fatal and there is no way to do anything about it but via extralegal means.