Well, in all logic one should expect larger, less densely populated countries, to have a higher percentage of employees working from home.
The population density and the size of the Netherlands (ignoring the fact that it is not the smallest country of Europe in any kind of sense) is not an obvious factor for making more people work from home, since it should make it easier for people to commute to work.
The awful traffic and saturated road network though might play a role in this.
But joking aside, by none, really. The Netherlands is very dense, and indeed quite small, but it's not the smallest by any common metric - size, population, economy.
The Netherlands is ranked #7 in the EU in terms of labour force, around 5% of the total EU workforce (with the UK gone, Germany, France and Italy form the top three, together they account for about 50% of the workforce).