People were certainly different sizes in the 1500s. If sizing doesn't need to adapt to the market, why shouldn't we be using 500 year old patterns?
Just because someone is average in size compared to others doesn’t mean to say they aren’t overweight or obese.
This is both completely beside the point and also, in a way, bang on.
Average certainly does not mean healthy weight, that's true. But that's not the point. Markets adapt for reality, not what we would like reality to be. So if the average customer is overweight, the sizing will reflect the size they are, not the size they ideally should be. Manufacturers would go out of business if they didn't cater for the size people ARE.
But you go on to say this which, while irrelevant to why sizing normalises to the mean, pretty much nails why people don't like it:
Will we if this trend continues be having a population of morbidly obese women saying they are a size 8 and wondering why when they are just average size their life expectancy is shorter than those painfully thin starving waifs who are clearly unwell as they are a size 0000000000
And this, I think, is what the public often doesn't like...the idea that overweight women might not think they are overweight or realise how fat they are. Why that is, I'd rather not go into here. It'll lead to a tangent and a bunfight.
But I'll just say that it's not the job of a manufacturer to police people's weights. Their job is to create clothes that sell to their target market. The customers get bigger, the clothing must do the same or it simply won't sell and the company folds.
The sizing numbers are not arbitrary. They relate to methods for scaling up and down...frequently arcane now, but they don't come out of nowhere. I don't see why it's so important for numbers to keep going up and up and up. It confuses customers and it reaches a point where it's just a bit silly. They've gone up a lot in recent years anyway as the plus size market has exploded. Size 30 was almost impossible to find 15 years ago but now it's stocked much more widely.
Sizing differs from place to place because stores profile their customers; ASOS is aimed at a younger market than Bon Marche, and younger women tend to be slimmer. It's also gone into the toilet for many reasons, but this is at least in part to consumer expectation that they should be able to pick up a mass produced size X from anywhere, off the peg and have it fit. Even when they know they have unusual proportions! ("I've got H cup boobs and a 26 inch waist, why does nothing fit me?")
If not producing plus sizes kept women at a healthy weight, we wouldn't have been getting fatter since those sizes were rarely available.