It still exists. Customize Toolbar -> Density (bottom left). There are only 2 or 3 presets, but it is possible to slightly adjust the icon size. Just confirmed on 109.0.1.

Huh, I get two presets. And the density only changes the spacing between the buttons. They're still the same size.

You may be right. I checked before replying, but I may have just been tricked by an optical illusion with the extra padding shifting everything.

By default there are only 2 densities, but there used to also be a "Compact" option which was removed. I believe it is possible to still enable this, though it is officially unsupported at this point.