It's an engineering reason really, the entire reason why MFTs were so popular when they came out was because people were tired of lugging around their Full-Frame camera's zoom lens, and were sick of missing moments when using a prime lens.

The marketing gimmick for awhile was ultra-zooms which allow for smaller lenses via fixing distortion using DSP, but this degrades the image quality, and so never became a solution for RAW shooters.

I think it's directly related to sensor size and given the shape of lenses (cylinders) that means bigger sensors should probably have a non linear relationship to lens size.Though it is probably not quite that simple. In any case, bigger lenses allow for smaller f stops with a given focal length, and people really do love bokeh...

I doubt it. I don’t think anyone is spending $2k on Canon L-series (red ring) lenses based on the size. On the high end, photographers are pretty discerning about equipment’s capabilities. If they made my Canon EF 35mm f1.4L USM II half the size and weight I’d be thrilled.

Bigger lenses tend to gather more light and that means better images in darker moments.