I had the torture to look for a new phone recently and one of my requirements was also a small size coming from a Pixel 3a (about 150mm iirc).

If you're looking for a small but flagship Android then there's currently only the Asus ZenFone (expensive) or the Galaxy phones (s21, a52) which are reasonable in size. But at least the Samsung are full of bloatware.

I think the main reason not more are being built because it's hard to fit in a decent battery and the latest hardware needs more power so phones get bigger.