In Ron Chernow's "Washington: A Life", GW is described as having such bad cash flow that he had to borrow money to travel to New York for his own 1789 inauguration. Then in 1797 following his presidency, he had to sell off land in order to fund his trip home.

Like most farmers, Washington was land rich, cash poor.

Flexner's "Washington: The Indispensable Man" points to how he was a traditional plantation owner prior to the Revolution when he amassed his wealth. (pg. 37) It took time to realize returns on working capital for farmers. When the money did come in it would be reinvested in the product; land, seed, labor. Any money removed from this cycle would slow the growth of his estate.

Remember too that Washington's wealth was largely the result of his marriage and his accumulation of land. Many of the large estates in Europe that you reference are the culmination of successive generations; each building upon previous successes. The large estates and country homes would be built up over time when money became available.

They weren't wealthy with large estates because they owned large tracts of land; they were wealthy because their families had controlled that land and its output for generations.

For comparison's sake:

Mount Vernon - 21 rooms, 11,000 square feet

Monticello - 33 rooms, 11,000 square feet

Montpelier - 22 rooms, 12,000 square feet

Simply put, though GW and the rest of the so-called "Virginia Gentry" were the preeminent elite by colonial standards, they would have been considered minor gentry by their English counterparts. Whereas England had a rigid class hierarchy reinforced by law and custom over several centuries, leading to a stunning concentration of hereditary wealth at the very top of English society, the colonies never had anything that even came close to such an institution. As GS Wood put it, colonial society was "looser" than English society. Those great English country houses did not belong to GW's "equals". The people that owned those houses were superior to GW in every respect save character. Remember, GW never aspired to be anything other than a "gentleman", which was the lowest rank of the English nobility. I don't think the Virginia planters were deliberately limiting themselves out of deference to their social betters across the Atlantic; they would have built larger houses if they could. Again quoting Wood, the "scale" of the colonial economy was an order of magnitude smaller than that of England.

What happened to his descendants. Are there still Washingtons in Vermont?

Edit. Just imagining if they found descendants of all the people who signed the Declaration.

One important thing that should derail any notion of "equals" is that the United States was a colony. There were many colonies, although Africa was divided up well after this.

So not only had his "equals" been building their wealth in England for sometime, many would have been building and compounding it through the colonies.

It's like the difference between the house of someone that owns one McDonald's franchise and the house of someone that is the CEO of McDonald's. The CEO gets money from all the operations, whereas the single franchise owner gets his cut from just his property.

You also have various labor issues, material availabilities, changes in architectural taste and the fact that some of the homes you're thinking of... lost all their money. In the 19th century it became a popular game in British upper class to try and desperately maintain their wealth by marrying off their sons and daughters to American robber baron's kin. There's a popular saying in financial planning that it takes 3 generations to lose your fortune. In England the cards are stacked in favor of the wealthy but even they are constantly appealing to the latest and greatest oligarchs from around the world.

It's because the house was originally a modest farmhouse built by Washington's father. His older half-brother added to the house and lived there until his death. George did not inherit the house until 1762 but he took it over after his brother's death. He raised the roof in 1758 to make it two stories and then added two wings in the 1770's. After the final redesign in the 70's the house is what we see today.

To answer your question though, the primary reason for such a small home is that it was built upon small original structure.