“choose to pursue Ph.D.” is one thing but “earning a doctorate” is another. They don’t just hand out the degrees after 5-9 years even in STEM. There are a lot of weeding out and attrition. (Incidentally, I have a PhD.) Thus, I think that this stat does tell something about “quality of preparation for research and the interest level and drive of the peer group.”
These stats are often used to dispel the myth, “My child wants to study Science/Engineering so he/she should not go to a SLAC but a larger University where he/she can do research.”
If a high school student already has taken many college level classes and performed research with professors during the summers, then he/she could run out of stem classes to take at SLACs. A large research university would be a better choice for him/her as the student can take graduate level classes there.
For other students, I think the choice between SLACs or universities are the same as in any other majors. Personal fit.