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Can you explain how miners increase profit by increasing the block size, this doesn't compute for me. Currently miners are gaining the most out of everyone from the current status quo because of the rising fees. They could be thinking long term ie lets not make $1 on 100 transactions, let's make $0.001 on a Million transactions, but that's a long long way off and might not ever happen.
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users won't put up with increasing fees forever, if it continues going up, soon people will stop using bitcoin for transactions and move on to other things and transaction count will fall and fees go down again and because of people leaving price will also fall and in the long run it is miners who are fucked!
(this may take a long time but eventually it will happen)
i am not sure about what are the downsides of bigger blocks but to answer your question, bigger blocks means more transactions in one block and a higher total fee miners can get hence a higher profit. and more importantly it means scaling to match the need of 2017 not remain the same thing as it was back in couple years ago and can lead to more adoption, higher price and again more profit.