That's to be expected. There were likely people buying 27'' iMacs without really needing the performance just for the big screen, and without really needing the latter either; as for those who *really* need both, the Mac Studio and a Studio Display or a third-party model (depending on line of work and/or budget) are actually the true 5K iMac and iMac Pro killers.
As for the old 21,5'' model, with that huge bezel, I have an iMac G5 from 2005 right behind me that has almost as big a screen and only slightly larger bezel as those last Intel models, for crying out loud… The M1 and M3 models manage to fit a much larger screen than the last 4K machines in an ever-so-slightly wider (by 1,9cm/0.75'') and taller (by 1,1cm/0.43'') package. And if you compare it to the old 24'' LED Cinema Display and 24'' iMacs from 2006 and 2007-2009, the difference is even more dramatic. Let that sink in.
Like it or not, these iMacs are a true return to form, to the original iMac G3 (which, incidentally, was lurking in the corner as a bit of an easter egg, in very appropriate Halloween Tangerine). Heck, even the first dramatic expansion to the iMac's screen, the latter 20'' iMac G4 model, looked a bit top-heavy and unwieldy (I always found my 17'' model much more elegant, if you ask me). It was never meant to be a professional range and was, indeed, a one-size-per-generation affair until July 2002, more than four years after its inception, and even then one could argue that the widescreen model wasn't that dramatic of an upgrade; it just became “pro” out of necessity and Apple's stubbornness in not offering us the mythical “headless iMac” (one could argue that the Mac Mini was precisely such a machine, but it was always a bit underpowered and left a big gap between it and whatever tower Apple sold at the time… The mythical Quad 2012 model and later the Space Gray one were the closest to the regular iMacs of their time but, in retrospect, they were nowhere near close to the Studio – or the iMac Pro, for that matter – in sheer power when compared to the professional desktop tower).
After all these decades of complaining, Apple finally gave us the Studio, and now… people here on MR seemingly miss being saddled to an integrated display the size of a small aircraft carrier that's bound to become really expensive e-waste as soon as the CPU and GPU become obsolete? Sheesh, it reminds me of those cats who keep scratching at the door and, when their human servants finally open it up for them, promptly turn away from it. 😂