It's not a wash. A common cast aluminum 20-inch wheel weighs a whole lot more than a common cast 16-inch wheel. Also, only performance vehicles get fitted with larger brakes. Many vehicles have discs that would fit fine under a much smaller wheel because they are designed with the smaller wheel as standard, and the larger wheel as an option.

Also, a larger rotor weighs more than a smaller one.

Combined, a large wheel and tire will require more energy to move and to stop, and will add as 75 pounds or more to the weight of the vehicle. This has negative impact on handling and fuel economy.

The only reason why the manufacturers add a large wheel option is because people want them.

The alternative to a cast alloy wheel is not another smaller cast alloy wheel but a steel one.

Larger wheel vs larger rim is not the same thing. A larger wheel has a larger weight but smaller rolling resistance. A larger rim on the same sized wheel has better handling characteristics and more room for larger discs, whether it is on a performance vehicle or a regular one doesn't really matter, plenty of mid-sized sedans of today are yesterdays performance vehicles.

There are outside exceptions (any SUV, ridiculously sized wheels on many American cars and people driving trucks when a normal passenger vehicle would be more appropriate). Those do have worse handling and fuel economy, but they're the exception, not the rule.