Yes and no.
The Twins aren't a small market team. They're a mid market team run by business people with a small market mindset that only care about the bottom line, no interest in the product on the field. This is not unique to the Twins, but it feels like their risk averse attitude has permeated the culture of the entire organization. The Twin Cities would be most fittingly compared to the mid-markets of Denver, Seattle, San Diego, or even Detroit (now that it is such a dwindling market this generation). No one in considers these small markets.
Year by year, the Twins payroll don't differ all that much from this group, but what sets the Twins apart, is they will never go for it. In a vacuum, the payroll this year isn't insulting. But the reason it was such a slap in the face to everyone is they rightfully thought this is a window and the time to invest. Small and Mid Market teams have smaller windows of opportunity, but they come and go fairly frequently, depending on the baseball people in charge. The reason the Rays are viewed so highly is because they're seemingly always opening up new narrow windows. But when one of these windows arises, these teams have to pounce.
The Tigers have gone for it (though those days may be done now that their own nepo baby is in charge). The Mariners have gone for it (and failed, but their fans reward them by showing up). The Padres have gone for it so much that the other billionaires got upset because it was making them all look bad.
The Minnesota Twins have never really gone for it. The Josh Donaldson signing is the closest I think think of, but COVID kinda killed that and otherwise they've never really extended themselves past a risk averse mindset in order to try to provide anything more than an 86 win team. Just enough to tell their fanbase that "hey, we tried!" and try to convince people that squeaking into the playoffs is enough to be a contender.
This is a mindset of the owners, and this is what I how I see the mindset of the front office. No one thought this was a legit contender in the offseason even if we foolishly thought they were favorites for the AL Central. What well-run organizations will do is retool or ramp up. Twins don't do that. They love to strive for 86 wins and hope they can recapture the impossibility of the '87 Twins.