I don’t think this fully explains it. In the nineties you could build a whole application using a toolkit like MFC, and you could ship the entire .dll, which bundled a whole bunch of (low-res, remarkably tasteless even for the time) bitmapped UI assets, and the resulting package didn’t hold a candle to modern bloat. Nor could it: you wanted that self-extracting installer (this predated MSI!) to be reasonable to download on a 56k modem, and even if you used a CD, you wanted room for something else on that CD.

Of course, there were multi-hundred-MB software packages in that era, but they were complex, multifunctional, and highly capable. And IIRC all of Microsoft Office (RIP!) except for some rarely used extras still managed to fit in one CD for a long time.