Years ago, there was a presentation [1] by Peter Rizun of Bitcoin Unlimited at Stanford that demonstrated ~100TPS on Bitcoin, and the potential for 1000+ TPS if certain bottlenecks were removed. People said the same thing you're saying back then, but it served to motivate the big block community, and now today BSV routinely does 300+ MB blocks (1000+ tps). This Teranode software is the future of BSV and will become the common node configuration within a few years, so it's worth taking seriously. Also, I left a comment in this thread explaining why this test is more representative than you may think [2].
That's not the issue. Block size has to be limited to protect decentralization. Decentralization is the only thing that has value in blockchains, otherwise you're better off using centralized databases.
I'm aware of that argument. The counter-argument goes that at scale, larger blocks would bring in more businesses, more miners, and more competition, and that competition is what actually protects the chain from bad actors who might try to change the rules or censor transactions, not decentralization, and that decentralization is mostly a meme to pacify the masses from realizing who actually has power over the network.
Well, that's a good argument but it's wrong. Larger blocks makes it harder to compete, because it's harder to run a full node. If everyone has to trust the datacenters that run full nodes, then it's game over for everyone else.
The protocol is protected by allowing everyone to run their own full node, to give every user and every entity the power to choose which version of the protocol they want to run. When the network is run by its users, the network evolves in a direction that is best for the users. When the network is run by a few large businesses, the network evolves in a direction that is best for them.
The Bitcoin Core's layered approach is a much better solution than big blocks. The first layer protects the protocol itself, and "big blocks" are implemented on layers on top of that without compromising the core protocol.
[1] https://www.youtube.com/watch?v=5SJm2ep3X_M
[2] https://news.ycombinator.com/item?id=27597510