I chatted about this with @Matthew_White who reminded me that you'd previously helped us fix a Central export bug (ODK Central corrupts large csv media files). There were a couple of versions around that time which had higher memory needs on build. We have since addressed those and we verified that 0.8.x can be built on a 1gb droplet.
This seems large for images set to "very small". Could you please let us know the size of one image in KB and pixels?
The 1G is how much swap you'd like to allocate. I would recommend starting with 1G. Swap is slow so ideally it's only used rarely for operations that temporarily spike up memory need.
We have recently found that one of the libraries we use has a slow memory leak. We don't think it is experienced often but since you've been running this server for a while, it could be a possible explanation for your higher-than-expected memory needs. Have you restarted Central with systemctl restart docker-compose@central recently? If not, it might be something to try. If you do try it and find that you are no longer running into memory issues, that would be good to know.