I've read the story, I think it's a good story, but if you think it through, it'sits plausibility is debatable.
We'd have to ask how far the builders went to deal with such issues. Maybe they don'tdidn't give the robots real water but some chemical that behaves in a way that "looks right". (And of course if the robots drink it, they're programmed to think it tastes like water.) Presumably the robots are built so that their strength, speed, etc "feels right". The acceleration of gravity would be tough to work around as long as Tiny Town is on the surface of the Earth. But if you get most things to feel right, maybe nobody notices a few odd things, or if they do, they write it off.
Of course, the whole point of the story was that people just woke up one morning in their robot bodies in this artificial world. Presumably they had no reason to doubt that this was not just another day. So ... how odd would things have to be before you started sayng, "Hey, this is weird"? Sure, someone with scientific expertise who suspected he had been miniturizedminiaturized like this could think of dozens of experiments to test the theory. But would your everyday experiences be enough to make you ask the question? If you were shrunk to 1 mm, I suspect they would be. But if shrunk to 1 foot? Maybe not. It's really hard to say.
When I read the story I wondered: Ifif the builders of Tiny Town had no moral qualms about uploading people's consciousness into these robots and using them for these experiments, why not just cordon off a real town of real people and do similar experiments? Indeed they wouldn't have to cordon it off, just run their different advertisements and observe what happens. Well, okay, with actual people they couldn't do the daily reset to get a controlled experiment. But it would seem a whole lot cheaper and easier. If they have the political pull that they can requisition the bodies of all the people killed in this explosion and upload their consciousness, surely they have the political pull to get whatever laws they need passed to let them run their advertising campaigns in one little town. Etc.