Same here. And I have a friend who keeps his small IPhone because they stopped building smaller phones, too. There is a demand, maybe not that big.
For me, I want to be able to operate the phone with one hand, and the large screen makes it difficult to reach all the spots on the screen even with large hands. I do operate my Fairphone 5 with one hand, but it is super awkward and at some point, the phone will fall into a gully because I cannot hold it tight while navigating.
And I wouldn't mind 2mm more thickness if this means the cameras are flush with the back and the battery is larger.
Whenever I see this when talking about small phones, I'm reminded of the stats, where the iPhone minis were a small proportion of iPhone sales but still by themselves outsold most manufacturers.
I was in the same boat and literally this week bought a Pixel 8. It's a 2 year old phone but with the extended support period that's no longer a problem, and being old means you can get it new for about €300 or refurbished for even less.
The other option is the Samsung S2x line, which you can apply the same strategy to.
And still in every phone topic people complain about phones being too big... I'd love to have a smaller affordable smartphone.