OP is using the term "gravity fed" to mean "non pressurized" - such as when a 55 gal barrel or 275 gal poly tote is supported on a frame and used to feed a small waterng bowl, trough, etc.
Not a system whereby a watering trough is kept full by virtue of equal water elevation in some huge...
I use something similar in two gravity fed systems. They work. One is a stock tank valve, same principle, different float shape. The other is identical design, but slightly smaller, in an automatic dog watering bowl.
Easy. You answered the problem yourself.
Your barrel is creating an inadequate vapor lock (negative pressure space), because its deforming from outside (atmospheric) pressure. The larger the reservior, the more water has to flow out before the negative pressure of the void equals outside...