Where the big producers ARE totally not listening is monetization. But here again 'globally that work' and most (not all) customers see themselves as more 'moraly right' than they really are. Everyone is happy to bash f2p immoral economic system, but are glad to enjoy free games. They will all speak about how possessing your games is important, but will take gamepass anytime because it's less costly. (here again they are just pragmatic and nothing is wring with that).
A funny thing when you discuss and do post mortems with little game development studio, is that each time they try to avoid a notoriously 'shady' practice, first critics will be about them missing (mainly gamble/casino mechanics and timesink/grinding features) ^^
> is there really all that much demand for the size of game advocated for?
Yes, people do buy and play small games.
> Aren't those publishers asking for bigger games because that's what the market is looking for?
Obviously, there is demand for big games because big games sell. But the publishers focusing on big games doesn't mean that there is only demand for big games. There are multiple reasons why publishers would not be interested in small games or small studios.