The iPhone is apparently the phone of choice for photographers, who know what an f stop is. I believe that spec is for them, everyone wants their f/1.2 L lens or whatever. Look at all of Apple's recent iPhone ads; they are all about the photos you can take (if you are willing to re-edit them in Photoshop to remove all the denoise and compression artifacts, which they even mention in the ads with a white-on-white disclaimer).

Small sensors are getting better. I am shocked at how good the image quality is on my RX100 (with a "one inch" sensor; one inch refers to the size of vacuum tube that would contain such a sensor if it were 1960 or something, no dimension is anywhere near one inch). I'm not going to give up 4x5 for it, but it's way better than a phone.

That said, the camera bump is ugly. Why can't they use a telephoto design (your 500mm SLR lens isn't 500mm long, remember).

It's a great point from a marketing perspective. Something users don't understand but can pretend too - I need this because it's got a f/1.8 camera, way better than the Samsung f/5.6 [I made that up]. What's super good is that it looks so technical, it looks like something that real cameras have about them too. Marketing fluff, yay.

It will perform better than f/2.2 of the old phone. I know several professional photographers who often carry the iPhone when they don't need all their equipment. Its not that hard to take good photos with it, especially with enough light