To ensure that those who are otherwise uninformed about the pertinent facts aren't mis-informed by blatant lies, I feel obligated to point out that the, ah... "criticism" of Aristotle in this thread is rather amateurish and dishonest. Most of the claims/accusations are either very deceptive (purposely or due to lack of knowledge) or outright falsehoods. A critique raised by people who have (at best) a very rudimentary knowledge of Aristotelian philosophy, and whose assertions seem to be based on skimming CliffsNotes, should not be considered authorative-- or even valid.
Now, I'll be the first to admit that Aristotle was a product of Hellenic culture, and thus by definition also a product of its limitations and preconceived notions. This does not suggest that Aristotle was therefore wrong in his reasoning. And the fact is: we owe our understanding of this distinction to Aristotle!
There is a difference between flawed premises and flawed reasoning. Aristotle's premises were flawed-- we can say that with the benefit of additional millennia of knowledge, and instant access to a vast wealth of knowledge, which Aristotle did not and could not possess. However, Aristotle's reasoning based on the premises he had is actually very thorough. Which is no surprise, because as I said: we owe this understanding of premises and the logical process to Aristotle. He's the one who defined that.
The high school-level "gotcha!" that Aristotle was wrong about various scientific facts is, of course, barely worth refuting. It's too imbecilic for that. Nobody who's intellectually honest compares the knowledge of a historical figure to the knowledge we have millennia later; the only proper comparison is to the man's own contemporaries. And what do we then conclude? We conclude that Aristotle made vast, crucial contributions to practically every field of science. One may even argue that Aristotle formulated the first rudimentary form of what we call the scientific method. (A good read on that, which requires no specialist knowledge, is Leroi's excellent book The Lagoon: How Aristotle Invented Science.)
As for the context of Aristotle's thinking here: he observed that isonomia (a reasonable "equality before the law") existed only in city-states and other local polities, which were by definition traditionally very homogeneous. This enabled a direct discourse within the corpus of the populace. Such "involvement" of the citizenry in decision-making was unheard-of in larger polities (insofar as Aristotle knew, or could possibly know). So his inference that large, multi-ethnic states are invaribly subject to despotism and frequent disorder was based on the best evidence he had.
Indeed, his observations have been in large part vindicated. Even now, it is an undeniable reality that as homogeneous polities become more heterogeneous (that is: when substantial numbers of foreigners immigrate), the social fabric breaks down, social trust diminishes, political stability is reduced, and all sorts of undesirable effects (such as increased crime and decreased economic prosperity) tend to follow. Naturally, this effect tends to be temporary if the migrants are much like the natives (because it eases their assimilation), but in the case of very foreign immigrants (such as, for instance, Muslims into a Christian country), all evidence thus far indicates that the issue cannot be resolved even after four generations...
A counter-point to Aristotle's point about larger states always being despotic can be found in the modern world, namely in the form of suitably decentralised (con)federal states. But these did not exist in Aristotle's world. All the "leagues" of smaller polities that he knew of were based on a common ethnos, and there were no examples of multi-ethnic states that respected the freedom of the citizenry in any way. And indeed, regardless of the relative success of certain modern 'unions', the very existence of something like BLM would have Aristotle saying something like: "See? I told you so. Multi-cultural states can't maintain freedom. Either they cease being free, or they cease being multi-cultural..."
(Rome, an example mentioned as a successful multi-ethnic polity, indeed ceased being multi-cultural to a significant degree, due to its ability to instill Romanitas in all its citizens. Once that sense of common Romanitas began to crumble, the Empire could not survive.)