Why are 318's low HP and torque?

They don't move as much air through them. Like others have said about the 3C's....
cam....make it possible to pump more air through, cam allows valves to stay open longer (duration) and lift pushes valves open further.
compression.... improve combustion efficiency of the air that is moving through
carb....put more gas/better atomization so it allows the charged air/fuel mix to be more efficient (a bigger combustion "bang".

Other things that help flow more air or air flow efficiency.... headers/exhaust improve exhaust gas removal/flow. Head porting/polishing improve flow (enlarged ports for example) and efficiency (polishing allows air to flow more laminar rather than turbulent). Intake manifold....more flow volume/more flow efficiency. Bigger heads (340/360 for example) have bigger valves and bigger ports thus allowing for more air flow.