The reason is that in Zen 4 the relatively narrow instruction decoder is frequently the bottleneck, so twice less instructions can influence the speed very much.
On future CPUs that will be able to decode more instructions in parallel, like Zen 5 and the future Intel CPUs, 512-bit instructions might no longer increase the speed when the width of the execution units remains of 256 bits, so perhaps even AMD may introduce a split between laptop CPUs that implement only the 256-bit subset of AVX-512 rebranded AVX10 and server CPUs that implement the full AVX-512 a.k.a. AVX10.
Single-pumped AVX2 implementations already had >150 extra 256-bit registers for pipelining purposes. And if you're double pumping 512-bit instructions, then you can pipeline just as deep without changing that number.
Maintaining similar performance is not 512B->2KB, it's 5KB->7KB.
This new ISA seems to include 256 bit versions of the instructions which were previously only in AVX-512 though. That's exciting.