This is not a post in support of a change in block size or for sidechains, I'm not qualified to take a side in that debate at all lol. What are the consequences of a block size increase and more specifically how it would be harmful for bitcoin's decentralization?
I think you hit on the answer earlier in your post: bigger blocks = a bigger blockchain = less people running full nodes = more centralization.
Somewhat humorously, BCH blocks never come close to getting filled and are on average much smaller than BTC blocks. BSV block size limit is even bigger and has even fewer transactions.
I think both the on- and off-chain scaling solutions are a much better approach than increasing the block size limit, for the very reason that its a bad idea to let the blockchain become exponentially larger. Right now its growing at a linear rate and it should be kept that way.
Of course there are those who absolutely insist on "staying true to Satoshi's white paper," which itself is not perfect and merely an outline for the idea of what went on to become bitcoin. I see increasing block size as merely the twiddling of an ancient parameter and rather a stagnant approach to a technology still largely under development.
