The 2 to 5 size jump is only really because there’s no top or bottom bezel and the screen extends all the way to the top/bottom edges. The width is within a few mm and the body width/height is also within a few mm. I got tricked thinking I was gonna get the same size and now my fingers hurt from the back button being that much lower. At least in lineage I can set the hole punch setting to crop the top of the display (adding a black bar to the top of the screen where the camera is) so I don’t have to reach too high for notifications. It’s a shame there’s no setting to crop the bottom of the screen too.
From the related post linked by op, it’s described as just a portion of the managed instance hosting fee going back to the project devs. So if you pay them to host a lemmy instance, a small cut goes to Lemmy devs. Doesn’t seem sketchy at all. Seems to have nothing to do with monetizing the instance itself, which could be funded by voluntary donations as normal or you could probably do membership fees as some instances do. It seems this is just about giving funding to the software devs. Hopefully this encourages other managed hosting providers to also give a cut of their revenue to the software they are using for their business.