At the same time, game studios can't publish a game that runs steady at their target frame-rate on ps5 to save their lives (except for indie titles). I work in game dev: it's doable and makes no sense to me that tiny teams are optimizing their games better than $100M projects

Maybe you’re not properly jaded. It seems to me that having a large team would mean that each individual would have less impact, less authority, and less autonomy. The people in charge of the whole mess will want their money and will be comparably indifferent to things like optimization and performance. So long as it sells.