Things can get both more expensive and cheaper at scale, hence the term.

For example (and relevant to AI) I can generate electricity on my roof at $0.20-25/kWh, batteries included. In California the electric utility can’t offer it cheaper than $0.30-0.50/kWh. Therefore at scale, electricity is actually more expensive.

There are many such examples.

Yeah, I think the fallacy here is the conflation of scale and centralization.

Right now, there is way more scale in centralized AI than there is at the edge. But that could flip. I'd still probably put the probability that it will under 50%. But I'd also put it above zero!