"Need to" and "sane" are among my favourite subjective terms!
(Further below, I'll go into in which contexts I'd agree with your assessment and why. But for now the other side of the coin.)
In the real world, current-day, why do many enterprises and IT departments and SME shops go for µservice designs, even though they're not multimillion-user-scale? Not for Google/Netflix/Facebook scale, not (primarily/openly) for hipness, but they do like among other reasons:
- that µs auto-forces certain level of discipline in areas that would be harder-to-enforce/easier-to-preempt by devs in other approaches --- modularity is auto-enforced, separation of concerns, separation of interfaces and implementations, or what some call (applicably-or-not) "unix philosophy"
- they can evolve the building blocks of systems less disruptively (keep interfaces, change underlyings), swap out parts, rewrites, plug in new features to the system etc
- allows for bring-your-own-language/tech-stack (thx to containers + wire-interop) which for one brings insights over time as to which techs win for which areas, but also attracts & helps retain talent, and again allows evolving the system with ongoing developments rather than letting the monolith degrade into legacy because things out there change faster than it could be rewritten
I'd prefer your approach for intimately small teams though. Should be much more productive. If you sit 3-5 equally talented, same-tech/stack and superbly-proficient-in-it devs in a garage/basement/lab for a few months, they'll probably achieve much more & more productively if they forgoe all the modern µservices / dev-ops byzantine-rabbithole-labyrinths and churn out their packages / modules together in an intimate tight fast-paced co-located self-reinforcing collab flow. No contest!
Just doesn't exist often in the wild, where either remote distributed web-dev teams or dispersed enterprise IT departments needing to "integrate", rule the roost.
(Update/edit: I'm mostly describing current beliefs and hopes "out there", not that they'll magically hold true even for the most inept of teams at-the-end-of-the-day! We all know: people easily can, and many will, 'screw up somewhat' or even fail in any architecture, any language, any methodology..)