Audio over Bluetooth: most detailed information about profiles and codecs (2019)

Miniaturization is indeed a challenge. Who does make really small wifi units? Who do they sell to? How much smaller do they need to be? I suspect it's simply never been a goal. And why would it be? There's no protocols that make wifi even potentially compatible with these sort of consumer device systems, no matter the size! Even with what we have today though, a wifi microphone or wifi gaming headset should be easily possible, no challenge at all, and could have far better quality & likely latency than what we expect from bluetooth. And I rather believe we could make smaller wifi if we had an interest in doing so. We are limited by our imaginations, our imaginations and our lack of standards/will.

My point is that there's inherent energy required to transmit information via radio waves given a specific modulation and framing. Less data takes less energy than more data, and less framing takes less energy than more framing. For the same data rate (digital audio), lower latency requires more power than higher latency because there's more framing overhead. Additionally, because of how noisy the medium is, there's an inherent need for redundancy in the transmitted data, and that redundancy must either be distributed in time or in space. Distributing it in time generally requires less power but inherently adds latency. Distributing it in space means transmitting the signal with more inherent power.

That's true whether you use bluetooth or wifi and have an optimized ASIC. The difference between the two is the available modulations and framing. If wifi supports a modulation that's more inherently efficient at transmitting low latency audio data than bluetooth, then it would make sense to implement it. WiFi seemingly isn't designed to do that, though. It's designed to be good at transferring data at orders of magnitude higher data rates, using proportionately higher power. The corresponding framing is designed around that assumption.

Legacy bluetooth is terrible, but so is legacy wifi. Presumably, the latest bluetooth standards make use of modern modulations and framing techniques to minimize power consumption and latency appropriate for its use cases. If wifi were strictly better for the same use cases, then the next bluetooth standard would simply be "bluetooth" branding on top of something like wifi-direct.