But it's not the flagship iPhone...
When Apple sells you their SE they're not selling you their best iPhone
In an ideal world, Apple would sell everyone higher-capacity iPhone 6s Plus devices on a regular schedule. That's would certainly help out their profits, but people have different needs, budgets, and tastes. I think the answer for iPhones used to be easy—in the days of one-size, always get the newest when released so you'd have longer support, rather than buying a 1- or 2-year-old iPhone. With the 6/6 Plus, that changed a bit in that the 6 was still a go-to recommendation, but the 6 Plus was an added bonus for those who wanted an even larger phone or really really wanted optical image stabilization.
The 6s/6s Plus continued this method and was always the most powerful and utilizing Apple's latest technology (and manufacturing techniques). However, for someone to have gone from a 4, 4S, 5, 5S, 5c to a 6s/6s Plus (a "flagship" as what's thrown around) and then dislike the increase in size, the SE may be an upgrade
for them. You still are on a current-generation device in most ways and saved some money and might have a more enjoyable experience. I have a coworker who really regrets the size of his iPhone 6s Plus and isn't very tech-savvy to the point of paying it off from the carrier, selling it online, or doing some other things like that. I think for him, something like the 6s or even the SE would still qualify as an "upgrade" regardless of the specifications being worse because it's a better experience
for him.
The iPhone lineup is different now and the "best" iPhone has gone from a purely technological decision to a bit of tradeoffs, so finding the best iPhone is really finding the best iPhone
for the person using it. At this point, I'd recommend anyone thinking of an iPhone with no context go play with the various sizes at the store and see what they get the best impression from. In fact, it's easier to suggest that people avoid the 6 and 6 Plus at this point since they're just the odd devices out (more expensive and less powerful than the SE and only a stone's throw in price from the 6s/6s Plus).
For me, I didn't mind the form factor of the iPhone 6 (although there were a few awkward handling moments), but I also had some fond memories of my iPhone 5 and thought I'd give the SE a try. Additionally, I was motivated in that I could do it for not really any cost if I decided to keep it (sell my 6 for about what an SE costs or return the SE within the 14 days). I was not really in the market for a new phone and wanted to try to stretch my 6 a bit longer than prior two-year upgrade cycles, so Apple ended up with a sale that they probably wouldn't have gotten until maybe late next year. At its price-to-power ratio, the SE is a great choice for people who have all sorts of "good enough" prior-gen iPhones looking to get something with an A9 processor.
And that's where there seems to be so much controversy—in my case, the SE was an upgrade in that it has a better camera, CPU, GPU, more RAM, etc. The battery lasts longer than my 6 did and I have warranty coverage again. By those facts alone, that's an upgrade.
