It's ok, but it does drastically reduce its utility. Conversely, anything that can be put into smartphone becomes much more useful. It often makes a difference between just having a tool for some odd job vs. gaining a capability.

The reason is simple: you always have your phone on you, or near you. It's the most easily accessible piece of electronics, and - if you're storage limited - the last one you're likely to leave behind. There is a generic social acceptance of everyone having a phone on them (even if stashed in a pocket).

A FLIR camera as a separate device? I'm unlikely to carry it with me unless I have a specific reason, and people will look at me weird if I walk around with one. A smartphone-attachable FLIR camera? It's still a hassle to carry, there's a good chance I'll leave one behind (comparable to a bluetooth headset). A FLIR camera built into smartphone? On me all the time, everywhere, and always ready to use in random, unpredictable situations.

And yes, it's the same reason why regular smartphone cameras all but killed the compact camera as a product. Having a tool always on you expands possible use cases so much it offsets for suboptimal performance/form factor.