Infinity Blade 3 is 1.7 GB. A single photo takes up more space than a song from an album. 40 minutes worth of 4k video maxes out the device (and that's optimistically assuming the apps that come with the phone don't take up any space).
You sound like when data plan providers say "Our average customer doesn't use that much data." Of course they don't. They try to stay within the ridiculous limits providers give them.
iOS 9 alone takes up a few GBs. The only reason the 16 GB option is the base option is because it anchors the price of iPhones. iPhones have an absurdly large profit margin, and price anchoring just provides the average consumer a psychological "out".
Music is definitely a sticking point for me, I've got 30GB of music on my phone, and the same again in applications and games.