Yes Postgres can work in the small for a lot of things, it can even work at surprising scale if you use it according to its strengths.
But if you use it for things it doesn't shine at, at inappropropriate scale - you'll almost certainly run into issues. And resolving those can often be a bigger challenge than choosing a more suitable solution in the first place. But often I think younger/less experienced engineers just have to burn themselves, thus why this never seems to die.