Digging, if you don't care about accuracy, can be done with smaller blocks.
Building not. Try building a nice house, but when you try to place blocks you get a burb of tiny blocks being strewn all over.
Look at what people are actually doing in Minecraft. Terraria is a completely different game, especially in regards to this mechanic and the gameplay surrounding this mechanic.
Also, for a 2D game, halving the block size means you quadruple the amount of blocks. For a 3D game it's 8x.
2D and 3D are vastly different and stuff that works in 2D often doesn't work in 3D or vice-versa.
For example, try to make a 2D first-person shooter. Or an RTS where units can freely move in 3D. Even something as simple as Chess completely falls apart when you introduce a 3D playing field.
(Goes without saying, this is about 2D/3D gameplay, not 2D/3D graphics. Every physical chess set has 3D graphics, but they also all have 2D gameplay.)