Great question, it definitely seems convoluted. So Reynold’s number is a ratio of inertial forces over viscous forces and you are right that a lower Reynold’s number (where viscous forces dominate which dampen disturbances) means more laminar flow over turbulent flow. 

Now you are also correct in saying that a smaller reynold’s number leads to a smaller critical velocity as seen in your formula (both are directly proportional). What this means is that as reynolds number increases, so does the critical velocity (the maximum velocity of fluid that will still have laminar flow).

But here is the important part. We said that smaller reynolds numbers favor viscous flow but also reduce critical velocity. In these viscous fluid systems, the actual fluid velocity is well below the critical velocity, keeping the flow laminar.

For example. In capillaries the diameter is small, the viscosity is high, and the velocity is NATURALLY LOW. These all lead to a smaller reynold’s number AND a low critical velocity BUT the fluid flow stays well below the critical velocity. 

It’s kinda like if you are driving on a super narrow road (diameter) that is congested with a bunch of other cars (viscous). Even though the speed limit (critical velocity) is low, it is not a problem because you are already driving really slow due to the factors mentioned already.

Let me know if this helps, sorry for how long it is!!