As with most of this type of technology, most of the stuff you see is basically a giant refrigerator and giant vacuum cleaner. The actual meat is much smaller and hidden from view.
This is exactly the point. If storing random data was the norm (formatting utilities would offer it) then it would be hard to make a case against it.
And it actually _does_ make sense for formatting utilities to offer it, as this is a good way to ensure that data is really gone after formatting (writing all 0s or all 1s could leave information at the physical layer; and any intermediate layer could not compress random data much so the data must be overwritten).
Apple may be on the side of privacy, but since they are competing everybody out of the market with their slick consumer products they actually form a threat to privacy since now the government has to only implement a backdoor at one vendor.
Another nitpick: why are only the button outlines having a jelly effect and not the texts written on them? This makes them feel physically unconnected.
And it is indeed smaller than most smartphones. Apple never made a small smartphone, presumably because they need the big screen for their vending-machine-in-your-pocket to sell more content.