Sorry not getting this, if you reduce the Tier 2 teams you reduce the number of matches with Tier 1 sides unless you make a major change to the matches in between.
But you are seeing all tier 2 sides as being similar, while they are not - some (e.g. Japan, Fiji, Samoa) are or are close to being competitive against some of the tier 1 sides. Other's (e.g. Namibia, Russia, Uruguay's) aspirations aren't at that level yet and their best result would be a victory against a good tier 2 side. So the latter really shouldn't be in the world cup (and wouldn't be under a 16 team format). But for the former they would still be playing exactly the same number of world cup matches against tier 1 opponents - so for Japan the 'lost' match in a 16 match format compared to the current 20 team format would be against Russia.
And of course the world cup finals are currently the only time tier 2 sides play tier 1 sides in anything other than meaningless friendlies. I want to see a proper qualifying tournament - perhaps not all teams would have to qualify (minus hosts, as in football) but under a 16 team format I'd like to see only the quarter finalists, or maybe even better, the semi-finalists, qualify automatically. If that happened, then Japan and Fiji would be playing Scotland, Argentina (maybe even Ireland and France) in meaningful qualifying matches in the intervening 4 years between world cups.
So the number of meaningful tier 2 vs tier 1 games would increase significantly.
I think also that there should be layers of qualifying tournament - each broadly competitive within itself. So below the final qualifying we might have Namibia and Uruguay having to compete hard in a proper tournament against teams of similar quality to get through to the final qualifying tournament.
At the moment, below the top tier there are far to many teams who are either playing meaningless friendlies and the the only time thy play competitive games they are totally one sided - in both directions - as an example see Namibia, qualifying tournament was piss easy for them playing teams massively worse than them. But in the finals they are playing games against teams far too good for them (the only match outside that category, arguably, was the dead rubber against Canada that was cancelled). Teams develop by playing regularly and competitively against other teams of similar quality or a little better.