@upmultimedia From personal experience, it depends on what they're struggling with. It may be disorienting if they have any dementia. There won't be a staff to help them in a smaller place, and should one of them become confused, you might have a parent wandering the streets and on the news.
Plus, if they want to stay where they are, it could get ugly, and you'd bear the brunt of it. Hiring a maid service might help (though my mother immediately threw out a physical therapist who alluded that her place was a bit messy, so your mileage may vary).
However, if they want to move and it's their idea to do this, if there are no problems with cognition, then it sounds like a practical idea. The hard part then might be choosing what to keep.