The Z Flip is even smaller folded and has been around for years. The cover screen used to be very limited, but the made it larger and added more functionality over time. I think some people use the cover screen for daily messaging, etc.
Yup, the new phone size is in between the Flip and the previous Fold (now Fold Pro).
I would not take the release of this device as evidence that people wanted a smaller phone, no more than the release of the original iPhone Mini and Galaxy S10e, and to some extent the iPhone Air and the Galaxy Edge. Manufacturers are experimenting to see what form factors people will buy and it is entirely possible that this size will be phased out by both Samsung and Apple in a generation.
Samsung has a major advantage over Apple in that they have multiple generations of folding phones so modifying both their manufacturing and software is less of an issue.
I don't even think this counts because then you'd be paying for the brittle and useless big folding display as well, when all you want is the smaller outer one. Plus the worse repairability.
