Moultons are not faster than 700C road bikes. Thats a nonsence. The faster a wheel rotates the more resistance you have to fight against – windage of the spokes, friction of the bearings. The fact is that for a given gearing a larger wheel will be faster. Forget inertia’s and accelaration – we’re talking road bikes here not motorbikes, so it is negligable.
Nope, sorry.
Wind resistance from the spokes is less with small wheels. The top speed of a spoke is at the top of the wheel, where it’s going twice as fast as the bike. Smaller spokes have a smaller cross-section, so lower air resistance.
Bearing friction isn’t purely a function of speed, it’s also a function of loading and other factors, so wheel size isn’t a big issue – and bearing resistance is such a tiny component of drag anyway.
However, with a large wheel the cross-section of the tyre is quite a bit bigger – up to twice as big. Same with the trailing rim. Same with the fork blades.
So, all in all, small wheels on their own even if you keep the rest of the geometry unchanged are quite a bit more aerodynamic.