did anyone say anything about larger die? I think this is a more-die play, so a given defect density won't affect yield. (maybe a small improvement due to less circumference for given area.)
Nonetheless, the reduction in fabrication cost is greater for large-area devices, for 2 reasons.
One is that on bigger wafers less area is wasted at the periphery, where in many places a full die does not fit inside the circle, so an area corresponding with a fraction of a die remains unused. The amount of such wasted area grows quickly with the size of the die.
The second reason is that the dies that are close to the wafer edge, even if they fit inside they have worse yields than the dies that are far from the edge. Again, the proportion of such dies with worse yields increases with the die size and it is lower for bigger wafers.
They are mostly cutting transistors, voltage regulators, and such out of those. There's already no practical limitation on the size of those components.
While this is not the principal reason for using bigger wafers, bigger wafers reduce the cost of large-area devices more than they reduce the cost of small-area devices.