One of the biggest benefits of building a niche website portfolio is the increased liquidity felt by the website owner.
If you own one large website, say valued at $500K, you should be able to get a roughly similar return on your investment as someone with 5 niche sites valued at $100K each.
However, in practice, there is a very robust market of buyers of sites valued at $80K-$100K. Conversely, the market of buyers who can afford purchasing a site for $400K-$500K is relatively small.
Additionally, having the portfolio of smaller sites allows a site owner to sell a portion of their portfolio (say, one or two sites), to reap short term cash gains, while still holding on to their remaining income producing assets. The site owner with one larger site could theoretically sell equity in their site (in similar $100K chunks to the smaller sites in the niche website portfolio), but there are very few investors who are interested in buying only a piece of a website.
Especially when it comes to a larger sale, buyers are often competitors, or people who operate their own digital publishing business in an adjacent niche.
While websites with good content and strong traffic can produce income at rates that should entice silent partners willing to accept a relatively high ROI, in practice, the buyer is going to have some specific use for that site. This makes them less likely to buy a portion of a high income website, and hold it purely for cash flow, when they can modify/improve the content based on some unique set of skills that they bring to the table.
If you are 100% sure that you will never sell your site, the larger site may indeed be more appealing. But if you are not 100% sure, or want to be able to take advantage of a one of sale of your assets at a high multiple, without getting out of the blogging business altogether, the niche website portfolio will most likely provide you with the most flexibility and liquidity.