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It's actually a bit more subtle than consumers not buying them.
When LTE came out, it was inefficient and used lower frequencies than cell phones used before. So they needed big phones that they could stick big batteries and antennas in.
Smaller phones existed, but often lacked features of big phones, and battery life was terrible due to the aforementioned power consumption problem. Likewise, reception suffered.
Now, the power problem has been solved and LTE uses less power than CDMA techs did. Antenna and radio design has improved to mitigate reception issues so smaller antennae don't hurt as much as they once did. However, now phones have giant camera modules in them and antennae for a plethora of services and features they think people want like UWB, NFC, wireless charging. (They all have their place, just stating this because they aren't "essential".)
People stopped buying small phones because they were "terrible" by comparison. Then manufacturers claimed people didn't want small phones, so they stopped making them. Now we are stuck because all the junk they throw in phones need all that space.
Tl;dr: the wireless industry killed small phones and blamed consumers.