One of the claims/excuses that may come up from the manufacturers is that they did used to make smaller wheel bikes but they didn't sell, and I do remember there being 650c wheel bikes for sale a decade or 2 ago.
The problem was that they never made them right even with the smaller wheels so small riders didn't like them either.
The fundamental problem was that even with their small wheels, they still had LONG cranks and steep (75 degree) seat tube angles so they were no more comfortable for small riders than the 700c wheel bikes were.
The key is in short/appropriately sized cranks, and then design/build the bike around the correct sized cranks. Then you end up with lower bottom bracket heights, importantly, RELAXED seat tube angles and genuinely short front-centre distances (from the BB to the front wheel axle).
The problem for manufacturing economics is that this all means lots more different sized parts on a production line where as the goal of a production line is to keep the different number of parts to an absolute minimum.
So they fudged it. They fundamentally make larger bikes and just fudge some minor differences for small people that are "acceptable" from a production line manufacturing point of view.
I understand all this yet I maintain that they have missed their "centre" by a LONG way.