Offensively Krug is a number one defenseman. There are maybe at most 20 guys in the league who can match or exceed his production on the ice.
Defensively he may not be in the league's top 20, but I don't think you could make a case for more than 50 guys being better than him on defense. But everyone is susceptible to cognitive bias, and a common one in the hockey fandom is that small skilled guys are incapable of defending. So when fans watch Krug play, they completely disregard his incredible skating, speed and vision in the defensive zone, and focus in on the rare mistakes that occur because of his size. Fans don't think he should be good defensively, so when they watch they see what justifies this belief.