okay, look, increased rotational mass means it takes more effort for the engine to power the car. if you reduce the rotational mass with a lighter wheel and tire combination, that means it will take less power to move the wheels and that is more power to increase acceleration.

now, larger overal wheel and tire combo's usually weight more, which means more effort, also, the travel a greater distance in one revolution.

put it this way, i have some free weights here in my room, with two sets of dumbbell weights. i have a set of 2.5 pounders, and a set of 7.5 pounders.

the 2.5 pounders are lighter, easier for me to move around, and have a smaller diameter than the 7.5 pound weights, but the 7.5 pound weight travel farther in one rotation than the 2.5 pound weights.

now, your car doesn't know how big your wheels are. the speedometer and odometer are calibrated to tell you how fast and far you are going based on the distance traveled in one rotation of your stock wheel. bigger or smaller wheels will throw this off.

smaller wheels aren't as bad unless they are narrower. wider tires mean more traction because you have a larger contact patch, narrower means less traction, which is bad.

any questions?

 

The effect of a larger tire circumference is a gear ratio change in all gears but you will not notice it by looking at the speedo because the rpm to speed ratio stays the same but you will be going faster in each gear at red line. This give the feeling of a more sluggish acceleration due to the taller gearing. You can also gain more mileage if you compensate for the gearing change in the mileage on the odometer and the new tire compound is not too sticky creating more drag.

 

yes, roll resistance as it is called i believe.

 

Bigger wheels doesn't improve handling. Bigger wheels usually lead to wider tires and a wider contact patch (where the rubber meets the road). This means more grip, not improved handling.