The whole assembly is still quite big with those two fans while all other 13" Apple Notebooks have only one. Next they had to fit some big battery to handle the higher power consumption of the new Display.
The missing GPU doesn't save all that much space there is still loads of stuff that needs to fit on the logic board. So all in all it just worked out to be less space.
Stuff like the Keyboard, Touchpad, even speakers take relatively more space in the small notebook. The cooling system doesn't look like it shrank enough compared to its 15" counterpart. The have to design all as small as possible and than fill the rest with battery. If that battery is to weak all they can do is make the battery thicker.
I guess they designed for the same thickness as the 15" but ended up with too weak a battery so they had to add thickness to but in a fat battery. 1mm makes a lot of difference for the battery.