Maybe us consumers underestimate how much space those internals take? The larger screen to body ratio would not only take more space in an already tiny phone, but the battery needed to power that would also need to be larger. The old SE had a 1600mAH battery... which is half of the 3000mAh+ even smaller phones have these days, and none of those lasts more than one full day.
So we somehow expect them to take the exact same form factor and somehow magically get a 10% larger screen and 50% larger battery in there? My guess is that it's just not physically possible to achieve that. Big chin and forehead is the best we can get with the current battery technology for a phone that size.
