> why are phones getting larger as battery and semiconductor tech continues to improve?

I don't doubt that the average phone has grown in size, the base iPhone has stayed roughly the same size for 7 years at this point. The 16 is only 0.15"x0.03"x0.01" larger than the iPhone X from 2017 and the base iPhone peaked in height and width all the way back in 2019 with the iPhone 11.

I think the simple answer is that they've pretty much found the sweet spot and even if there are people out there who want a smaller phone, most of them would still rather have the same size phone with more capability.