Yup. If I wanted an extra computer for general use that would plug-in and go, wouldn't need a lot of peripherals then... well, actually, I'd probably get a MacBook Air - but if it had to be a desktop, the 24" iMac would be perfect. The CPU is powerful enough to do a bit of everything, the display is pretty good and a decent size, and if I got the silver option I wouldn't have to throw up in my mouth a bit every time I looked at it. If, however, I'm spending $2000+ on a Mx Max computer and $1000+ on displays
I want to be able to pick and choose.
It's not just cost, specs and future waste, but ergonomics: the 27" iMac is already a pain when you have to reach around the back to plug things in, or move it around - any larger and it would get ridiculous. With a large screen I'm definitely going to want a more flexible stand than you get with the iMac (and Apple's adjustable stands
certainly aren't worth the price) - yes, you could get the VESA option and your mount of choice - but then you have a dozen wires for peripherals etc. dangling from your display and it rapidly becomes
much neater to have your computer in a box on the desk.
I only got an iMac in 2017 because there was no viable 'headless' Mac at the time. The 5k iMac display
was really nice and
sounded like a good deal c.f. $1200+ for an LG Ultrafine - but a "good deal" is only good if it gives you what you want, and however nice the image was, having a large display - with no external input - welded to my computer was a permanent pain in the backside. Now I've switched to a Studio and
two matching third-party displays and it is far better suited to my needs... and, maybe, in a couple of years time I'll replace the computer and keep the screens or, maybe, replace the screens and keep the computer... So much more flexible.
True. For some of us it is a
vast improvement. It comes down to a whole laundry list of practical reasons why separate components are more flexible and practical vs. "it looks neat" for the iMac. Ultimately, it comes down to sales numbers - we don't have those, Apple does and
they have reacted by dropping the large-screen iMacs. If they'd been flying off the shelves, Apple could have stuck an M1 Pro into a 5k iMac chassis ages ago. Plus, Apple can sell Studio Displays, Pro XDRs and any future displays to MacBook owners, Mac Pro owners, Mac Mini owners - not just people who happen to want an iMac.
...then what about people who want a Pro XDR display to go with their Mac desktop? I think it's ludicrously expensive
but if I were being paid to stare at a screen for most of the day and it fit my needs I wouldn't rule it out (I don't see any comparable panels at lower prices - plus I could always stand it on a pile of bricks and save $1000

)... but its far too expensive to bundle
as standard with an iMac and I
certainly wouldn't want a $5000 display that died with the computer it was glued in to. We may see a 'cheaper' XDR display from Apple, but that's gonna be "cheaper than $5000", not pocket money, and
that price will probably be based on attracting sales from
all higher-end Mac owners.
Even a Mac Studio/"Mini Pro" + Studio Display setup costs about the same as a top-end iMac used to (by the time you've factored in the 32GB RAM upgrade) for a spec comparable to a $5000 iMac Pro, and that's ignoring the various
far cheaper 3rd-party display choices.
Yes, we've lost the $1800 entry-level i5 5k iMac - but I suspect the 5k panels have got just too expensive to make that viable (5k has totally failed to catch on outside of the Mac world) - plus, I wouldn't recommend a regular M1/M2 to push that many pixels, even if it "works". OTOH You can pair a M2 Mini with a pretty decent 4k screen for a lot less.