We’re doing a small bathroom renovation project and want to mate a Dewalt orbital sander to a smallish shop vac. Long term we don’t desire a large vacuum unit. Looking at 1-1/2 to 2-1/2 gallon units. Most we’ve looked at have 2.5 peak horsepower.
Any opinions, insights if this combination would be adequate for paint prep sanding, effective dust removal? Thanks!

You don't want too much suction - that will pull the sander down onto the piece harder and you run the risk of removing too much material. Also, the filter in your vac makes a difference - HEPA is better as it will remove more fine particulate. However, it may clog quickly, requiring more frequent cleaning.

Given the above, my gut says your probably OK with what you're looking at, just don't expect miracles.

I have both shop-vac and rigid ~5-6HP models and both do about the same for pulling wood-sanding dust off (80-180grit). Plenty of suction, not that great at eliminating the fine dust. A smaller/lower power one would likely work as/almost as good. A filter bag would probably help, a HEPA filter would be better.
I 3D-printed an adapter for my bosch 5.5" for the 2.5" hose, or look for a sander or hose that has an adapter. The 2.5" hose is a pain in the ass to maneuver, but I'm too cheap to buy a 1.25". I'll wait until I get annoyed & buy a dust extractor

A cheap box fan is ~20x20 - some duct tape & a medium-grade furnace filter will help keep the dust inside the room your working in. MERV8 or 11 & low/medium speed - you want to pull the dusty air towards it, not blow all the crap around the room.

Buy an extra length of vacuum hose. When ready to start, attach the hose to the output side of the tank and rubber band a wet sock on the end of the hose... traps fine dust.

Used this method when cleaning the inside of my coal stove.

Wash the sock before wearing.

I used a hand sander that had a hose that went in a 5 gallon bucket filled with water and an outlet where you attached your shop vacuum.