How does this help avoid merge conflicts in any way? Git is already smart enough to merge changes to different parts of the same file. If you move different parts of a file to some other place, you're not changing anything interesting from the POV of git-merge.

The actual game changer is separating concerns properly. Small classes tend to be more cleanly separated, but it's not a given. And when your concerns are properly separated, it doesn't matter much if the separated concerns happen to be in separate files or not.