Why Sweden invested in coastal warships

Were Sweden's littoral ships a response to its coastline and lack of manpower compared with Russia?

Yes, partly, but they also exploited the Baltic as Sweden's internal communications network, defensive depth, and natural maneuver space.

The Baltic connected Sweden's imperial possessions and gave its forces room to move along coasts and rivers. Littoral warships took advantage of that geography, with limited manpower contributing to the choice. The same waterways provided internal communications and defensive depth, making coastal operations a way to exploit Sweden's position.