I think you're close but not quite there on that one.
We've had large scale fights that forced people to spread out around an significant arena literally right from 2.0. BCOB T5's original arena is literally the palm of a hand and you had to make use of almost all of it when placing puddles, dodging twisters or avoiding snowballing from a Dreadknight. There's lots more examples over the years as well. Go watch a video of A6S or A7S.
However I do agree, I think this change is for the design team and fits into the overall trend of the game neatly. IMO I think it's to allow easier tuning of fights around the assumption of a given level of DPS from a raid team. Getting good uptime on a melee was historically the hardest part of getting your DPS from 'good' to 'top tier' back in the day and on Coil/Alex, you'd see a pretty significant swing between a decent and outstanding melee's damage depending on if the fight was more of a static target dummy or something that forced a lot of movement and disconnects. Making the hitboxes super large pretty much deletes that variable bringing a good player closer to the top tier in the same way that removing Cleric Stance narrowed the gap for healers as well.
It all comes back to SE's quest to get the skill ceiling down to floor level.



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