Why can a small reactor do jobs a radioisotope power source cannot?

Answer: It can supply far more steady power

It can supply far more steady power ✓ — Correct! A radioisotope power source is great for probes because it is simple and reliable, but its electric output is small. A small fission reactor can provide far higher continuous power, enough for habitats, excavation, ice processing, and other base-scale equipment.

It needs no radiation shielding — Not quite. Small reactors absolutely still need shielding and careful siting. Their advantage is not that they avoid radiation issues, but that they can deliver much more usable power than a radioisotope unit.

It uses no radioactive material — Not quite. Both systems rely on radioactive material. The difference is that one uses natural decay heat at low power, while the other uses a controlled fission chain reaction to reach much higher power levels.