The tiny blocksize makes sure that Bitcoin stays decentral. If you raise the blocksize, Bitcoins blockchain would grow too fast, requiring more storage, which could get really expensive, which would lead to the point that running a fullnode would centralize to less and rich entities. Currently, a 1TB SSD is enough to store the whole Bitcoin blockchain.
Discussion
This is the narrative which is more than a decade old now.
A 12tb harddrive costs 120$ now, Internet speed is 10-50x faster. There is no point running a node on a raspberry pie for $50. A single transaction has cost more a couple weeks ago.
Instead of increasing the blocksize to a reasonable size, adapt to the technological progress we have a chain which forces users into custodial wallets, which are not decentralized at all. It is paypal on bitcoin, no progress, no privacy, no control over your coins.
The blocksize limit is destroying everything what bitcoin was made for. It was supposed to be a p2p currency and to replace banks. Now we have Bitcoin Banks. Fuck that.