It certainly doesn’t have to be Fortnite in particular, which has over 80 million monthly logins, but if you are on a bus or subway count the number of people who aren’t reading, playing, or watching content on their phone during the journey.
As another example, Nintendo completely discontinued the non-XL 3DS models in the USA.
I think you aren’t wrong, there are enough people somewhere to buy a small screen smartphone, but apparently that number is small enough to not even open up a single assembly line for.
I can't comment on what those users want; I don't use any of those things on my phone. I'm not claiming that large phones will cease to exist; I'm guessing that there will be a new trend promoting smaller phones. Some folks will jump on the bandwagon, some will stick with their phablets. Apple in particular will probably make a big marketing push that tries to portray small phones as some kind of cutting-edge innovation.