Why would the Paleo people have lived in such small groups? There were only a few people living in the area.
There wasn't enough territory to support more people.
They did not want outsiders to be part of their band.
They could only support a few people with the nomadic life style.

The Paleo people lived in small groups because they could only support a few people with the nomadic lifestyle.

Explanation:

The first option is not correct because the Paleo humans were not so few in numbers, but they had a relatively steady and constantly growing population.

The second option is not correct because there was more than enough territory for much larger populations than the ones that existed in that period.

The third option is not correct because it was very common that outsiders were accepted in the group, though usually when one or more members of the group died and they needed the empty spaces filled.

The fourth option is correct because the Paleo people with their nomadic/hunter-gatherer lifestyle were in constant search of food, and it was not always abundant or easy to obtain, which limited then to having fewer members as they would need fewer resources, while a larger group in this period would most probably not be able to survive because of lack of food.