Screen power draw and battery capacity scale as the square of the linear dimension. They largely cancel out.
However, all the other hardware are a fixed size so proportionally large phones have longer battery lives.
Like internal component can be rearranged to an extent, and battery is a tradeoff, but the panel need to be one on the market, no demand, no panel
I say this as someone who clung onto his 1st gen SE until I got my current 13 mini