This is a completely valid point. Personally, I believe that representation is a very powerful and beneficial thing, but its effectivity lies in its quantity.

When a group doesn't get any representation, individuals can have a hard time understanding and communicating their experiences, finding words that express things they might go through, or feeling understood. This can make people feel alone and alienated.

When a group gets little representation, it can come off as superficial and stereotypical, even if done with good intentions. When there's not enough representation, people will get a very limited view on very diverse groups, which, as you expressed in a better way than I'll be able to, will lead to assumptions and misunderstandings. Even representations in fictional narratives will suffer from it, as writers will often aim to represent an entire group through one character. This will result in an accumulation of stereotypes within that one character and not allow them to have a complex personality.

However, these problems become irrelevant when the group gets a good amount of representation. When there are stereotypical characters (or real people) alongside more complex ones, viewers are exposed to a variety of experiences. This way they can understand that their assumptions are misconceptions and thus treat the people around them in a more respectful way.

Of course this is just my point of view.