I'm just an amateur with one fish but I think for any life form we can agree that a decent, clean living arrangement is really necessary to thrive, and most importantly humane.
I think small and unsuitable get lumped together a lot because there are many people out there who see the fish as an ornament 1st and a pet 2nd, vs the other way around. Just look at how some fish get marketed. Here in Japan its kinda bad for example.. they ship the fish, little tiny 1.5/2L 'tank', decorative marbles, pellets, right to your door complete, and presto you have a nice desktop fish to look at for a week then probably forget about. That's no way to go about keeping a pet.
That's probably why small living conditions get a bad rap.
As was pointed out tho there are some people out there who would add a heater, change the water daily, etc, do it properly even with those tiny decorative tanks, but I tend to believe anyone who really cared for the fish would get it a bigger space specially made for fish and something that was more livable. I suppose you can breed them in jars but as adults they should be in larger tanks for sure.
Here's an example from a popular online shopping site I found instantly:
Anyone starting off thinking this is how to keep a fish, yeah it'll eventually end up looking like the ones in the first photos.
Again, it's not the living space itself (although def. too small), I think it's the 'lifestyle' this kind of decorative fish-keeping promotes and the mentality that goes with it that leads to the fish's health deteriorating.