The 7th Cavalry numbered just under 600 men. The Sioux and Arapaho numbered just under 2000. However, Custer divided his command. Roughly half were with him, about 260 men, and the rest were under the command of Major Reno, with the invalids and a guard mount with the trains of pack horses. So when Custer was attacked, he was outnumbered by about six or seven to one. What was more significant is that he didn't know the ground, and, of course, his opponents did. They were about as well armed as his men were. Additionally, there is now good evidence that his men were suffering the early stages of pernicious, acute lead poisoning from the solder in the canned goods upon which they relied. Battlefield archaeology has dug up severl of Major Reno's men (archaeologists have not been allowed to dig up those already buried), and they show the signs of acute lead poisoning.
The Sioux drove off Reno's command, and Captain Benteen joined himon a knoll where they were able to hold out for three days before the Indians eventually left them alone. Custer's chief scout had told him it was the largest Indian village he had ever seen (he was a "half-breed" Crow-Frenchman himself), but Custer ignored that. He was concerned that the Indians would get away! He drove in the Indian scouts, and sent Benteen a note saying he had the village in sight, had the hostiles on the run, and to come on with the trains. Benteen had a look at it himself, and thought better of it. He crossed the valley of the Little Big Horn and joined Reno.
Immediatelyafterward, Benteen estimated the Indian force at 3000--which was almost twice as many as were actually present. Over the years, Benteen raised his estimate, and many American histories still claim that there were 5000 or 6000 Indians. However, the entire expedition of three columns of cavalry and infantry was based on an estimate that there were no more than 800 Indians on the loose. Their numbers were based on the number of Indians the Indian Agents had estimated had left the reservations. But most of those estimates were made weeks earlier, and it took days, not weeks for the Indians to assemble a force.
The bigger the estimate of the Indian forces, the less the sting of the defeat. Custer was mad, quite apart from the likely effect of chronic lead poisoning. He thought he'd ride out, massacre yet another Indian village and then run for President in the fall.