Increase developer productivity at the expense of hardware.
In this case, engineering is more expensive than hardware (because hardware is at the cost of the user).
The smallest iPhone starts at 128 GB. This means the application takes 500/128000 blocks: 0.4% of the total device storage.
Over time, the iPhones are going to have more and more storage. So, if app size is a problem, and over time, the problem is fixed by itself, why would you invest engineering resources into that ?
You have X engineers with Y amount of working hours, and tons of important things to do. Yes, probably fixing a problem that brings a low amount of complains from end users at the cost of productivity isn't high on the list for them.
EDIT: Possibly interesting source: https://www.androidauthority.com/average-smartphone-storage-...