- As you say, 24" is a considerable improvement (both in screen and performance) over previous "small" iMacs and would eat some sales of the lower end 5k iMac.
- From 2013 to 2021 Apple didn't really offer a viable headless desktop Mac (much has been said about the Trashcan, the 2014 Mini was the Worst Mini Ever, the 2018 Mini was knobbled by Intel integrated graphics and the 2019 Mac Pro was Serious Callers Only) - for a lot of people the iMac was the only viable choice for a desktop Mac. The current Apple Silicon Mini/Studio lineup represents a vast improvement in Apple's "headless" offering (slight hiatus while we wait for the M4 Studio) and a lot of previous 5k iMac users will have gone for this. Not forgetting that although the lower-end 5k Macs are a bargain we'll not see again, a Mini/Studio + Studio Display combo is actually competitive with the higher-end 5k iMacs and iMac Pro - plus cheaper screens are available (& your screen can be carried over to your next Mac).
- Cheap, easy 3rd party RAM upgrades - an attractive feature of Intel iMacs - were always going to go away with Apple Silicon (this affects the iMac vs. Studio price comparison).
- Intel iMacs used higher-TDP CPUs and GPUs than MacBook Pros, giving them significantly better overall and bang-for-buck performance. With Apple Silicon, iMacs would be using the Mx Pro and Max chips as MacBook Pro - with maybe marginally better performance due to better cooling, but nothing night and day. People who bought an MBP for portability and an iMac for heavy lifting now just need a nice display to dock with their MBP (Apple would love you to buy a Studio Display which is clearly designed for that role).
- The whole market is gradually moving from desktops to laptops anyway.
- I suspect that the entry-level5k iMac was priced with the assumption that, over it's lifetime, 5k3k would be taken up by the PC world and economies of scale would reduce the cost price. Turns out, the PC world isn't interested in 5k3k - the displays initially launched by Dell and HP tanked, the LG was only really of interest to Mac users and priced accordingly and even the recently launched Samsung 5k3k seems to be a reaction to Apple dropping the iMac!
Maybe Apple will eventually produce another "large" iMac but the odds seem stacked against it.
5k2k screens are usually ultrawide, 5120x2160 screens, with the same PPI as 4k UHD screens with the same screen height - just wider. Probably 163ppi or less. C.f. the Studio Display/old 5k iMac which is 5120x2880 (so closer to 5k3k) and 220ppi resolution.
5k2k Ultrawide will have many of the same "disadvantages" on Macs as 4kUHD displays - including fractional scaling to get the UI size "just right". Now - don't get me wrong - I'm a great proponent of the usability of 4kUHD displays on Macs and think that the issues with scaling have been over-stated -
but the whole point of paying the considerable premium for a 5120x2800 27" screen (or a 6k Pro XDR 32") is to hit that magic 220ppi "sweet spot" for running Mac OS at optimum scaling.