Claiming that xthinner can reduce 100mb blocks down to 1mb is dishonest. It might reduce the network transfer down to 1mb (assuming you already the txes), but on-disk storage would stay the same.
In short the most popular reason for not having a block size increase (to allow many low fee transactions) was that it would increase the cost of running a full node, in turn centralising the network. More transactions would mean nodes would need a bigger hard drive and a better cpu to process the transactions. The small block camp wanted people to be able to run nodes on a raspberry pi. This theory is misguided in my opinion though, they chose to sacrifice cheap transactions to keep node running costs cheap.
[1]https://medium.com/hackernoon/the-great-bitcoin-scaling-deba...
How are they profiting?
They voted with their hash power against Bitcoin Cash when it forked, which was the “increase the limit” fork aiming at low fees and high number of transactions.
Those miners can now enjoy high fees as a result.