That herb powder is like a fibrous food item in your stomach. It requires digestion. Digestion of something like this can take hours to complete. A powdered herb has been exposed to more air, light and sometimes heat, than an herb that has been left in bigger pieces. I feel that herbs are already subtle in their effect and they need to be kept in as good condition as possible in order to retain their potency.
Quality is everything with herbs.
So having said all that, I want to also assure you there are times that powdered herbs in capsules can be a very effective way of using herbs. Some powdered herbs in capsules, are very effectively used for digestive complaints. It makes sense to be digesting those herbs. Some herbs are so powerful that they serve their purpose very well in any form, including powdered herb capsules. Some kinds of ginseng are an example of this.