Higher megapixel sensors often give you better image sharpness and they can be binned to get better low light sensitivity when shot at lower resolutions. Also a lot of people (myself included) are ditching dedicated cameras for their photography and so yeah, I want a big image if I can get one. You can legitimately have decent sized prints made or use them as desktop wallpapers and that sort of thing. Larger image sizes also allow you to crop in on an image and still have a decent amount of resolution to work with.

I ditched my old Canon 5D3 when I got my last iPhone because I was no longer using the Canon professionally and the only reason I was holding onto it was for travel. The new iPhone finally shot good enough photos that I didn't feel the need to lug around a large camera anymore. It's not as good as the Canon but it's good enough now and sure as hell less of a hassle to carry around and doesn't immediately flag me as a tourist wherever I may be.