Oh yeah. Economies of scale. Surely he hasn't heard that one before. Good on you to point this out.
I'd say you clearly don't understand english maybe? Did you somehow miss this paragraph ?
Adam Back: The worry with extremely large blocks is that they can be used to exacerbate a selfish mining attack. If youve got a large miner or a couple of large miners, they can create very large blocks and other people wont be able to receive them or process them in time. So, they will gain an advantage in mining.
Bitcoin chose its parameters to make the advantage minimal so that its a level playing field between small miners and large miners. Right now, the interval between Bitcoin blocks is ten minutes. And the approximate time it takes to propagate, or send a block after its found, across the peer-to-peer network is about 10 or 15 seconds. You want the ratio between the propagation time and the block interval to be high enough, because, as a miner, while youre waiting to receive a block, or while youre processing a block to check its valid, youre unable to mine. So, you lose money.
By having larger blocks, its going to take a longer time to process them. So, its going to favor miners with higher bandwidth or who are more centrally connected via high speed links to other miners. It gives them an advantage.
If you increase the block size rapidly, the level playing field is eroded. If it gets eroded too much, once miners are able to create blocks that only they and a couple of other big miners can mine, they can exclude everybody else because [other miners] cant keep up.
The block size is there to put a check on these economies of scale and level the playing field.
This argument is antiquated. With pool mining the individual miner doesn't have to deal with the blocks at all. All that matters is that the pool has sufficient bandwith. I ran 84 machines through 3G with my phone as a wifi hotspot in a remote area just to check with a different cellular network. Worked like a charm.