Because flagships always were weird. You can only use proportional analysis in relationship through same class of GPUs. In this case, Blackwell is pretty much the same as RTX 4000 series.
If you use proportional size then you get into all sorts of weird stuff. How about those double GPUs flagships we had previously? That logic doesn't apply universally. Also, flagships die size is pretty much meaningless. Sometimes we get duds like RTX 3090 where it is the same die and doesn't have much of an uplift over RTX 3080. Each generation has its own context which isn't considered. Like GTX Titan Z or GTX 690 is proportionally double that of the next in line GPU.
We have to look more deeply and with context in mind. This generation it is not that rest of Blackwell is smaller. Actually it is the same or bigger than it was previously. RTX 5090 is oversized, because Nvidia couldn't produce meaningful generation uplift in order to make flagship feel exciting. So, they made it just bigger and even more dumber. However, he is not talking about 25% price increase for its size. Nvidia instead reduced prices for rest of its lineups rather than increased it while maintaining its size. They could of course given more of an GPU, but that would also came with price jumps across the board.
Steve is barking at the wrong tree here. He needed to release that video during Lovelace era. I found youtubers and community strangely quiet when Nvidia renamed RTX 4050 to RTX 4060 and RTX 4060 to RTX 4060 Ti. However, when Nvidia does nothing wrong, shitstorm gets unleashed. I feel that all this pent up anger just got released at a random time. Nvidia certainly shrunk their value offerings, but it wasn't today.
And not to be corporate bootlicker, but we must face reality. We have 3 competitors. Nvidia still produces the best product despite it setting the bar lower and lower. It is just what this industry is at the moment. If it would be easy to make better product, AMD or Intel would had certainly done it.