Since r<=sqrt(lambda), log2 r<=nu/2. Consequently log2 D=2Q*log2 r<=lambda/128, so D<=2^(lambda/128). This is a polynomial bound in n because lambda=ceil(log2 n). It does not say that D is small in practice. The layout needs arrays polynomial in D and n; without this bound, calling their construction polynomial in D would not imply polynomial preprocessing in the original input size. The argument applies only after the recipe has passed its basic checks, including r>=2.