Details of the obligation to light Hanukkah candles are outlined in the Talmud, Masekhet Shabbat. On 21b we are taught:
Our Rabbis taught: The mitzvah of Hanukkah requires one light for a person and his entire household; the mehadrin, the zealous, a light for each member of the household; and the mehadrin min ha-mehadrin, the extremely zealous: Bet Shammai maintain: On the first day eight lights are lit and thereafter they are gradually reduced; Bet Hillel say: On the first day one is lit and thereafter they are progressively increased.
Now, why is it that the enhancement of the mitzvah is a function of the number of family members? Wouldn’t a greater number of candles and a greater amount of light be more mehudar? A small family will always have a dimmer commemoration. And what does the number of family members have to do with this mitzvah altogether?