Shrinking the usable space on a block device is wildly impractical. The SSD has no awareness of how any specific LBA is being used, no way to communicate with the host system to find out what LBAs are safe to permanently remove. You can't just incrementally delete LBAs from the end of the drive, because important data gets stored there, like the backup GPT and OS recovery partitions. Filesystems also don't really like when they get truncated. Deleting LBAs from the middle of a filesystem would be even more catastrophic. The vast majority of software and operating systems are simply not equipped to treat all block devices as thinly-provisioned. [1]

And SSDs already have all the infrastructure for fully virtualizing the mapping between LBAs and physical addresses, because that's fundamental to their ordinary operation. They also don't all start out with the same capacity; a brand-new SSD already starts out with a non-empty list of bad blocks, usually a few per die.

Even if it were practical to dynamically shrink block devices, it wouldn't be worth the trouble. SSD wear leveling is generally effective. When the drive starts retiring worn out blocks en masse, you can expect most of the "good" blocks to end up in the "bad" column pretty soon. So trying to continue using the drive would mean you'd see the usable capacity rapidly diminish until it reached the inevitable catastrophe of deleting critical data. It makes a lot more sense to stop before that point and make the drive read-only while all the data is still intact and recoverable.

[1] Technically, ATA TRIM/NVMe Deallocate commands mean the host can inform the drive about what LBAs are not currently in use, but that always comes with the expectation that they are still available to be used in the future. NVMe 1.4 added commands like Verify and Get LBA Status that allow the host to query about damaged LBAs, but when the drive indicates data has been unrecoverably corrupted, the host expects to be able to write fresh data to those LBAs and have it stored on media that's still usable. The closest we can get to the kind of mechanism you want is with NVMe Zoned Namespaces, where the drive can mark individual zones as permanently read-only or offline. But that's pretty coarse-grained, and handling it gracefully on the software side is still a challenge.