For a first-century Jewish audience in Galilee, the mustard seed was the smallest seed in their lived experience and common parlance. It wasn't a modern botanical claim about every seed species on Earth. It was idiomatic, proverbial language drawn straight from the world they knew.
Rabbinic sources confirm thisJewish texts routinely used the mustard seed as the go-to illustration for something extremely tiny:
Mishnah
Toharot 8:8: even if pieces were “small as a mustard seed,” they join together.
"If a kneading trough was sloping downwards and there was dough in the higher part and dripping moisture in the lower part, then three pieces that jointly make up the bulk of an egg cannot be combined together, but two are combined. Rabbi Yose says: the two also cannot be combined unless they compress liquid between them. If the liquid was level, even though the piece was the size of a MUSTARD SEED they are combined together. Rabbi Dosa says: crumbled food cannot be combined together".
Babylonian Talmud Berakhot 31a: Israelite women were strict — if they saw “a drop of blood as small as a mustard seed,” they observed the rules.
"The Gemara offers several examples: Abaye said: One like this halakha of Rabbi Zeira, as Rabbi Zeira said: The daughters of Israel were stringent with themselves; to the extent that even if they see a drop of blood corresponding to the size of a MUSTARD SEED she sits seven clean days for it".
Mishnah Niddah 5:2
"If a priest was partaking of teruma, the portion of the produce designated for the priest, and sensed a quaking of his limbs indicating that a seminal emission was imminent, he should firmly hold his penis to prevent the emission from leaving his body, and swallow the teruma while ritually pure. And the emission of a zav and a seminal emission impart impurity in any amount, even like the size of a MUSTARD SEED or even smaller than that.