Too many chiefs and not enough Indians.

A free for all is not democracy. Democracy is about coming to a common consensus on how to apply things. The vote itself is not the point of democracy, it's a tool of it. Democracy should be about discussion and agreement on common goals and the best approach to reaching them.

So yes, delegating power does by definition dilute the value of each vote, but not each persons ability to engage and persuade which is a big part that you seem to be ignoring and which is certainly lost in the fee for all example you gavw in your example. It allows a minority or even an individual to derail a common consensus which goes against the concept of democracy.