Because it was:
1) Priced too high for the people who wanted a small light, phone or companies
If it had been released with a single camera, Touch ID and kept it close to $500 it would have been successful. Apple unfortunately kept the SE design around for a few more years so folk upgrading had no choice in the matter.
2) Was Released during a global pandemic.
Few people were leaving the house on a daily basis and WFH became the norm - bigger screens make sense if you are sitting on the couch on zoom calls.
By the time the 13 came around it would have been very difficult for most users to go back to a small screen despite the convenience. Anyone who wanted a small, low budget up-to-date phone was forced to go with the updated SE.
Nope.
The average consumer by then was aware of what a smaller battery means: less power throughout any given day, which leads to more frequent charging, which leads to the battery wearing down faster and having to pay for a battery replacement sooner rather than later.
And most do prefer typing on a bigger display and viewing content on a bigger display.
-With other brands, consumers predominantly opt for smartphones that are as large or larger than iPhone Pro Max.
It's simply a matter of people (increasingly) doing everything on their smartphones and looking at content more and more hours every day. And needing the smartphone to have great battery life throughout the 2-3 years before it's replaced.
This massive spike in screen time is what made phablets a no-brainer and killed the light and portable ones.
-iPhones <6.1" would only sell well in a lineup without >6.1" iPhones.
We live in a consumer culture where more is always more.
-If McDonald’s is selling a small, medium and XL milkshake most of us won’t even think about what amount XL is or if we can even drink that amount. We’ll get it just because it offers the lowest $/ounce price.
It’s the same reason why Costco and Walmart do all the bulk shopping deals.
On average, we buy as much as we can of almost everything as long as it’s within our budget.
Better safe than sorry, better more than less.
And regardless of our hoarding nature. The bigger price you pay for a larger smartphone is in fact a wiser choice as you do get a markedly higher value/$ and will postpone the costs associated with a battery replacement significantly.