Exactly. I think the more casual gamers find the iGPU to be "good enough" (even if it doesn't match my personal preferences). So if Intel's customers are seeing the benefit, good for Intel.
Intel had the ability to put more transistors on the same die size with the same power requirements. This was long after they reached thermal/clockspeed limits (with the P4). They started putting additional cores in there and bumped up the L2 and L3 caches, but there was still space left on the die.
What do you do with those extra transistors? It would be absurd to "leave them blank" as you are basically throwing money down the drain.
Most non-server systems are barely able to use 2 cores let alone 4, what would they do with 8 or 16? More efficient & powerful graphics built-in are a much better use of the die space. Even more so considering the rise of GPGPU and hardware decoding.
The iGPU needs to be manufactured anyway. And with memory controllers integrated into the CPU, it seems rather complicated to push the iGPU off the chip.
> and more RAM bandwidth
Cheap iGPUs on Motherboards would recycle the CPU's memory controller anyway. Did you work with computers in 2006 or so? Its definitely cheaper and more efficient to just integrate everything into the die in contrast to the designs of the past.
Note that ~15% of Steam Players are gaming on Intel iGPUs, as awful as they are.
http://store.steampowered.com/hwsurvey/