so why are the cargo capacities so small?
Probably because the developers either forgot the cube-square law, or willfully decided to ignore it so ships scaled in a more visually impressive manner without radically inflating their masses and cargo capacities (then having to balance thrusters and FSDs around 100kt ships). This is also probably why the smaller ships have reasonable densities on par with aircraft while the large ships resemble dirigibles, bounce castles, or aerogels.
A lot of people have big problems with the idea that something that's twice as long, but with the same proportions, is eight times the size. That third dimension breaks people's minds!
You have literally described Elite up till Odyssey, and I refer back to my last response to as how I see dealing with the aspects of Odyssey that aren't perfect.
By and large, I've felt that the decline of Elite started long before Odyssey, before release even. There have certainly been some improvements that I've enjoyed, but depreciation and bad kludges have always occurred and seem to come at an increasingly more rapid pace. Even if I limit myself to criticizing what was clearly unintentional, the state of the game immediately prior to Odyssey's release was not great and there was a lot I though should have been fixed before trying to integrate a major expansion.
Improvements aren't impossible, but they haven't been very forthcoming either. Odyssey is afflicted with a similar pattern to the base game, though less pronounced, because development has been slower. Again, there are definitely areas where it's improved, but there have been significant depreciation as well and the surface game still doesn't mesh well with the rest.
Speaking of which, to get back on topic; Morbad, what are your thoughts on Elite's development for 2024?
Beyond a trickle of basic maintenance, the only thing I expect to see is further development of the Thargoid war and galactic politics that I've either never been invested in or have been thoroughly turned off too. I'll be content to keep enjoying what I can where I can, if the game doesn't get much worse, but I don't expect it to get any better.
There is a ton of stuff that I'd like to see, some of which is even plausibly within FDev capabilities, but my expectation is stagnation.