The DPS of a single S7 is not expected to be much greater than the combined DPS of many smaller weapons on other, smaller ships. What makes the Ares better against larger ships than, say, the Vanguard?

As mentioned above, the current damage system is based purely on numerical hit points, but with the introduction of physicalized damage, larger weapons will have increased penetration. With this future addition, ship armor will essentially "shrug off" smaller rounds as they won't have enough kinetic energy to penetrate the armor. Whilst the Vanguard may have equal DPS on paper, the S2 nose guns may not be able to penetrate larger/capital ship hulls.