Garmisch this summer

Garmisch-Partenkirchen isn't a "small town" in comparison to other small towns nearby.

"Better" is very subjective of course. G-P is probably a better base town if you were doing multiple day trips to other places over several days. Personally, I like G-P's neighbor, Mittenwald, better for a one-night stop and for all-around atmosphere.

What you might do is take the direct train from Munich to Mittenwald on your first day. Quick guide to Mittenwald with town walk and activities:

https://hastingshouse.typepad.com/hastings_house_us/2007/04/mittenwald_germ.html

Then on Day 2, catch the train to G-P for your paragliding and sightseeing in there, and return to Munich in the late afternoon or evening. G-P train station has lockers for your bags while you sightsee there.

We had a hotel in Garmisch but changed to one inPartenkirchen as the area and builfingshad a more traditional feel to it.

FYI- I was all set to parasail/paraglide in the Alps last Sept., and accidentally discovered that my trip insurance didn't cover related injuries. I'm sure that the activity is overwhelmingly safe [as I plan to do so here in CA this summer] but just wanted to share this info, as you may want to check your policy regarding "extreme sports". Hope all works out as planned.
Safe travels!

Expensive, but I like the Staudacherhof to stay. Garmisch is getting better the last years. Will be even better when they finish the road tunnel around/under it towards Grainau. Some of my favorites are the Wankbahn, the Riessersee and old Bobsled run, Kriegergedächtniskapelle Garmisch and walk over to the Berggasthof Almhütte. The Alpspitz is always nice and a walk around the Eibsee too. There are older residential areas and interesting places in Garmish, you just have to look for them. I can't help with paragliding. I know your time is short, but for me Zillertal or Garmish Nähe need 3-4 days.

Taking a cable car up the Alpspitze or Zugspitze are good activities, but weather-dependent. The good news is that they can tend to have different localized weather, so if one is fogged in, you might still be able to get a clear view from the other. There's a Via Ferrata at the top of Alpspitze, so maybe that could be an activity of interest for your son if there are group excursions. Also in the area that I'd recommend is Highline 179 just across the border in Austria. It's an elevated suspension bridge that stretches across a mountain valley 300 feet below, with a nice castle ruin at one end. If you want a hike, I'd very much recommend Hollentalklamm. It's a hiking trail outside G-P along a very tight river gorge. Parts follow right along the river and are cut through the rock face, ending up at a chalet restaurant in the mountains.

As you were asking for alternatives, I know that following mountains are popular with paragliders.
Wallberg, near Tegernsee / Rottach-Egern
Brauneck, near Lenggries
Both are reachable by train in about 1 hour from Munich, thus would qualify a day-trips.