Palm key tone holes on German made saxophones:

The German made saxophones like J. Keilwerth, B&S and Dave Guardala (made by B&S) have smaller tone holes on the palm keys of their saxophones. 

Are there any advantages or drawbacks to this design?

The smaller tone holes allow the pitch of the palm key notes to not be as sharp as on the Selmer designed saxophones. This can be an advantage as it is not necessary to lip the palm keys down as much for the intonation.
The disadvantage is if the player is using a German designed tenor with small palm key tone holes and a French designed alto with the larger designed palm key tone holes, going back and forth between them can be a little more challenging than if both the alto and tenor had the same size palm key tone holes…..  in most cases this is not really a big problem…..

There are advantages and disadvantages for both size tone holes…..  EXAMPLE: the
“Jazz D” on the larger tone holes is usually stronger and has a better tone……

B&S Saxophone small palm key tone holes