I think the market has spoken quite loudly that it prefers phones larger than 4 inches. Whoever this "bunch of people" who want tiny phones are it doesn't seem there are enough of them for phone manufacturers to care.
Just because others don't hold the same outlook as you as far as the phone landscape doesn't mean they are "conditioned".
No, the market didn't speak at all. The OEMs spoke, and we just took it without complaining. We have become conditioned to accept that a phone over 2 years old makes one an outcast or something so we must have the newest because 'newer is always better' and so on. We accept imperfection, mediocrity these days. The days of companies making a mistake that ends the company are long gone. We have become complacent with whatever the OEM, be it Apple or Android, throws at us, assuming 'they know best'.
The comsumers are supposed to dictate the demand, not the reverse. Comsumers want x, company produces x. Now it's company produces y, garbage or not, but if tech bloggers love it, and it has an Apple logo, people buy y. Doesn't mean it is a success, just that people fell for it hook line and sinker. If supply and demand worked properly, Apple would never have removed the headphone jack or made a screen larger than 4" since that wasn't the way the market trends were going. In fact they were still succeeding quite well the way they had been for years. No consumer said 'no' to an iPhone because it had a headphone jack, no sales were being lost for not having large displays...No one asked for removing the jack or asked for a larger screen. The companies are supposed to listen to the free market not the other way around. For Apple they just ran out of ideas for improving so the only thing to do was 'change for the sake of change' and all they could come up with was 'get rid of headphone jack and make huge screen and jack the price even higher'.
Another example. iOS 7's success. Was it really a success? I think not. Apple took away the ability to downgrade and the numbers went up. People likely had the update automatically install as I did, and didn't know it was going to be flat UI garbage. The numbers were artificially inflated. Now, if they gave the choice to downgrade, then I would bet the numbers for iOS 6 would be far higher than iOS 7, and flat UI would fail just as it did for Microsoft when they launched Windows 8.
Companies no longer care what the free market wants. If they did, Apple would have backtracked a ton, and so would Google. The fact they don't care what we think anymore is blind arrogance. It means they know people will buy anything with an Apple logo and if Apple is the only real deal available, the mindset of 'I must upgrade' takes over. It doesn't mean they are happy, they just tolerate what is offered since they literally have no say in the matter.
I will never understand it. I think it has a lot to do with the whole 'catering to the masses' mindset. Otherwise known as catering to the idiots and ignorant people. Smart people or geeks have literally become irrelevant in the grand scheme of things. No one is catering to our needs. Not even a niche that sells for three times the cost of an iPhone 12. You'd think a company would exist the same way Rolex and Lamborghini exists, to cater to the niche market...such as those of us who prefer sub-4" displays and one-handed use.