I went to a elite SLAC, and DH went to a non-flagship regional state school without top graduate programs. Both of us went to grad school at a well regarded flagship state school with a very strong program in our field.
My experience at my SLAC: it was wonderful for me. I had intellectually engaging peers, classes that were as in depth as my grad classes by my junior/senior year, and really close knit mentoring relationships with faculty. I did research both on campus and off campus. Off campus gave me exposure to doing research with more resources, but my research on campus gave me a lot of autonomy to intellectually lead my projects. As I mentored a lot of undergrads in grad school, a lot of them were not used to taking that kind of intellectual ownership and mostly just helped me do stuff. But, I had more hand holding, which is not really a "real world experience." I was also a medium fish in a pool of very smart people, which has its disadvantages because it is harder to distinguish yourself academically.
DH: Very big fish in a not so elite environment. Because of this, he got a lot of individual attention, scholarships, academic awards, and research experience. He also did research at larger institutions over the summer. He really stood out as a stellar student (and was able to get into some great graduate programs), but on the other hand when he went to grad school, his background was deficient in some areas and he really had to self-study to catch up. He never really need to study all that hard in high school or college, and never got a B until grad school. Because DH is such a self-motivated person, he self-studied and got caught up with everyone else, but I'm not sure everyone would be that way, and I did see people who went to regional schools who were less driven flunk out.
Our observations of undergrads at Big Flagship state school: teaching is no one's priority there, so it really is what you make of it. The very best undergraduates, who get in research labs, take grad classes, take advantage of honors programs, and are driven to seek out mentors are as smart and driven as anywhere and have a phenomenal experience. And unlike an experience like mine, they did it without all the hand holding, which I think makes it all the more impressive. But on the other hand, it is easy (really easy) to slip through the cracks. I don't just mean flunk out too. I saw straight A students who had severe deficiencies in their background, because a lot of the time the lectures are huge and designed such that it is not that hard to get an A. If they don't actively seek out other opportunities (grad classes, research seminars, etc.) and just do their major requirements, their experience won't be that deep. A lot of people also never learn how to write, which rarely happened at my SLAC. I would say maybe only 2% of 18 year olds are really mature and driven enough to be the former sort of student who really maximizes their experience at a big state school. But also, a much broader number of people from all different backgrounds go to schools like that, and it is much more "real world," rather than a bubble of upper middle class privileged people.
So there you go. Will your DC do better as a big fish in a small pond, or with a stronger peer group? Are they a go getter enough to take advantage of phenomenal resources with little direction, or do they need more direct mentorship? I think it's a personal choice, and you can get a great education in a lot of settings. A lot of the time, as with many things in life, it's what you make of it.