The smallest I have used in ali is 3mm, which was fine. You can drill as long as your flutes are, peck cycle is easy to set up for deeper holes (linking tab on the drilling op in fusion) I generally do to 2/2.5x diameter then use a peck cycle.

I'm not sure what you mean about Z movement. But for as small as 1.2mm I would think a properly trammed spindle would be pretty essential. I can't see why it wouldn't do 1.2mm to 6mm depth, in fact I think the spindle would quite like it as a drill that small will be able to spin pretty fast and won't generate much force. For so many different sizes though you have to weigh up time saved having the machine do it vs time swapping collets and touching off tools. As you said you're making 100 odd, I would be tempted to make a jig with the machine to put the parts on and just drill all the holes with a cordless.