Abstract We present a solution to a longstanding challenge in nanoplasmonics and colloid chemistry: the anomalous optical absorption of noble metal nanoparticles in the ultrafine size range of 2.5–10 nm, characterized by a rapid long-wavelength shift in plasmon resonance as the particle size increases. Our investigation delves into the impact of alterations in electron density along the radial direction of nanoparticles and the resulting variations in dielectric constants on the spectral positioning of the plasmon resonance. We explore the interplay of the spill-out effect, volumetric compression, and their combined impact in different experimental conditions on electron density variation within the particle volume and its blurring at the particle boundary. The latter effectively forms a surface layer with altered dielectric constants and a size-independent extent. As particle size decreases, the influence of the surface layer becomes more pronounced, especially when its extent is comparable to the particle radius. These findings are specific to ultrafine plasmonic nanoparticles and highlight their unique properties.