> because there exists a useful upper to the size of payloads that companies actually want to ship to LEO in practice
This is only true because we are so completely beholden to the tyranny of the rocket equation with the current status quo. With the $/kg (and payload volume) that Starship would unlock, the entire ELO/GEO/Interplanetary/Deep Space market looks very different.
Labs in space. Hotels in space. Weapons in space. Much more interesting satellites in space. More government science missions. Privately funded science/research missions. etc
Like imagine how much better the James web could have been with such a large and cheap launch vehicle.
Weapons in space, yes. Government constellations are SpaceX's best opportunity. As for anything else, the market for anything bigger than Falcon 9 is very small. Elon Musk didn't even want to proceed with Falcon Heavy because there isn't much market for even that, but Shotwell managed to convince him that having Falcon Heavy would actually help sales of Falcon 9, by inducing the government to take SpaceX more seriously.
How many space telescopes better than anything we currently have can we put up when launch costs are <$50m?
A huge synthetic telescope in orbit with an aperture the size of the planet?
How many private earth observation satellites?
The market is huge when weight constraints largely go away and $/kg drops so hard.