We can do some sleuthing here by working under the singular assumption that Paradox staff haven't misspoken.
Wiz said, specifically: "Small independent nations are actually significantly buffed in income and forcelimits in 1.12"
He said in 1.12, not in the CS expansion. Therefore, we can rule out internal development entirely since this feature is locked behind the expansion.
The question of relative vs absolute is noted, but the phrasing used here suggests that it's an absolute buff to small independent nations as opposed to a straightforward nerf to the larger nations. Buffing small independent nations is not the same thing as nerfing large nations. Therefore, we can assume that small independent nations have more income and forcelimits than they did before on an absolute basis.
This leaves the question of how this is achieved. I can see two possibilities. One is a conditional modifier for small nations that gives a boost to these values. This could get awkward as initial growth could penalize instead of help, though this could be worked around with a "progressive" modifier so that you keep a bonus, but it grows smaller as you continue to expand. Basically the same concept as a progressive income tax.
A second possibility is that the base / capital bonuses for all nations have been increased. This is technically a boost to all nations; however, in terms of percentages, this proves to help small nations more than large ones. If you previously had the income and FL to support 4k troops, and after this change you can support 8k, then you've doubled your capabilities. A large nation that went from 20k to 24k doesn't see as much of an impact; it's a 20% increase. Further, 4k vs 20k is fairly dismal -- the smaller nation has 20% the power of the larger nation. But with 8k vs 24k, now the smaller nation has 33% the power of the larger nation. One issue is that Wiz specified "independent" nations, but a subject nation would enjoy this same boost. For this to be the method, subject nations would have to have a new penalty that slashes their base income and force limits back to the previous value.
Other possibilities, like every nation getting a percentage boost to income and manpower, can be rejected because this would not be considered a "significant buff" to small independent nations.
So, while we don't know the details, we can confidently conclude the following: Small nations have higher absolute values of income and force limits in 1.12 than before, in a way that makes them stronger vs larger nations than they once were. And it has nothing to do with improving development over time (which means it's almost certainly out-the-gate Nov 1444 modifications).