That's pretty normal I'd say, though not sure what provoked it. Pep has always worked with a small squad, and I've always said it leads to a better and more focused group. Too big of squads and you have morale drops, unhappy players, unfocused training sessions, etc. Just never works.
You need 2 players per position, and of that group of 20 (outside 2 goalies), you'll have probably 5 who start every game they're fit for, 5 who are bit part players who get limited minutes, and then 10 who are regular starters or regular subs who compete for spots. So that's a core group of 15 and 5 deeper players roughly. And then some academy players to fill out the group who any minutes is a bonus. Never realistic to have 20 truly top players.