Gotta disagree your saying a fish would reach its full potential in a larger tank that makes little to no sense yes if you stick a fish in a 2.gallon tank with pebble and nothing else it's gonna be pale and not happy but a planted tank with hiding spots etc there's no reason for it to not be happy
With experience off keeping a endler live bearer in a 3 gallon and a group of them in a 15 gallon there was no difference in colour and little difference in behaviour .
It can be done and your question of why someone would want a small tank that cost twice the price is really just down to personal opinion and preference And is abit like some one saying a ten gallons to small you could get a bigger tank for less money ( second hand) it's not what you want so you'd get a ten gallon
And pico's can look very effective
Bae