If Obsidian were to add mammals, reptiles, birds, etc they would have to add a whole new tier.
Generally speaking these animals are far stronger than all insects. Insects have often weak and squishy bodies and their exoskeletons are nothing compared to the scales or tough skin of mammals, reptiles or birds.
If obsidian added one of these animals they would have to add other equally strong animals to maintain balance and none of these could be insects because there virtually 0 insects that could take on a mammal,reptile or any other non-insect creature.
our tiny selves would also realistically have a hard time taking down mammals, reptiles or birds. That’s why I’d suggest sticking to adding more insects and biome to the game like centipedes or caterpillars to preserve balance and a large pool of equally fun builds to use.

I agree and disagree with you here. I'd love for a greater variety of bugs to be added to the yard, of course, but I believe it'd be possible to add VERY FEW small mammals and reptiles (not birds, as that'd be a bit much) into the game without it being entirely unrealistic. Instead I suggest that they be more like raids or large-scale combat scenarios when facing a very small lizard or gecko, or any other animal (mammal or reptile) that might be added. Or if need be, making it a story beat that maybe other animals were being experimented on with this shrinking technology that snuck away into the yard, either way, I'm game for these inclusions.