No apologies needed. You are not being obtuse, in fact, on the contrary, you are being very helpful. These are far from easy concepts to understand and explain. Furthermore I am not aware of any other crypto currency that has even seriously looked at these issues let alone proposed a solution or set of solutions, even though these are issues that every crypto currency faces.

You are of course correct. that "we need a way to match the internal cost (xmr) with the external value of xmr for adding data to the blockchain".

Monero however imposes a significant linear correlation between the internal cost (xmr) and the external value of adding data to the blockchain by virtue of the penalty function for blocksize scaling. I say linear because for a given base reward the cost in xmr adding a particular transaction of a given size in KB to a particular part of the penalty area falls liniarly with the the median of the blocksize. For example if M_N is 10x larger the cost per transaction falls by a factor of 10 since there are 10x as many transactions paying for a given amount of penalty. In this example I am assuming the transactions are all of the same size for simplicity.

B is the relative  increase in the block size over the median blocksize, It can range from 0 (no increase) to 1 (100% increase / doubling of the blocksize). The critical point here is that B attracts the same penalty in XMR for an increase in blocksize from say 1 MB to 1,1 MB than for say 1 GB to say 1.1 GB, since in both cases B = 0.1. In the latter case there are 1024x more transactions to absorb the cost of the penalty so the cost per transaction falls by a factor of 1024. Again I am assuming for simplicity the same distribution by size of transactions in the 1.1 MB and 1.1 GB blocks.

Now here is where it can get interesting. If the natural relationship between network value and network size is say M_N log (M_N) rather than M_N then it is possible for the cost of a transaction, in real terms, in the penalty area to rise with log (M_N) at least for a period of time. This can happen if for example market responds to this difference by optimizing transactions in order to minimize paying the penalty. This would occur because all transactions do not have the same priority. It is for this reason that there can be a very significant merit to use a different scaling formula (difficulty adjusted for block reward) for the low tier fee levels than for the high tier fee levels where the fees are effectively set by the base reward and median blocksize.