Principate
Saint Titanfall
The kits and the anime are all using the same base designs and scales. It's actually something they plan out and design beforehand. The scale works, the proportions are there. The SD size just isn't as small as you think it is. By and large the way the show presents the scales are accurate, and Star Winning is not a tiny mech, it's just shorter than the other two, but it's pretty fat and it's definitely not smaller in width. Obviously there will be some scenes here and there where the scale isn't completely consistent, because this hand drawn animation, but that doesn't mean the logic behind the transformation defies the conservation of mass.
This is a show about plastic model kits fighting, if the actual plastic model kits support a transformation in the exact same way as shown in the show, then clearly it works in terms of mass.
Edit: The official designs show very clearly how the mass is taken into account: http://gundam-bf.net/mechanics/21/
The waist is also a very clever gimmick because the short armor skirts are in the front when it's in SD, and when it goes Real, the waist is simply turned around so the longer armor skirts from the back show on the front instead.
There's an image on this very page that implies otherwise ignoring the perception which should make it seem bigger than normal in comparison to the gunplay not smaller. It's also not the only one, and consider, the number of times the gunpla has even appeared that's kind of important. In fact there was a whole plot point that's it's dimensions were significantly smaller then the other two in the previous episode with the small tunnel only it could in in with ample room as well as the numerous shots emphasising it's size I'm not going to photo bomb this thread with similar such images, so take that as what you will. But yes there's a lot to suggest the scales in the anime aren't the same all you have to do is look at the previous episode.
it's not actually surprising that someone would question this transformation based on that/