But isn't that just a temporary workaround? And it doesn't address the other issues SegWit tries to solve, like allowing "instantaneous" transactions? How can Bitcoin ever hope to become a mainstream currency if you have to way dozens of minutes for your transaction to be validated?
I also see that some people worry that using bigger and bigger block sizes could end up "concentrating the mining power in the hands of a few miners" but since that already seems to be the case I'm not sure it's a very good counter argument.
Make it unlimited then, or grow dynamically based on historical block sizes, there's lots of options. The original limit was only added as an anti-spam measure back when anyone could mine blocks.
I would rather the core developers focus on the current capacity problems and deal with use cases like instant transactions at another time. Make bitcoin work as it's supposed to and let the community decide on adding features later - don't try to push them both together.
An unbounded block size would bring about a number of attacks. Denial of service attacks would be trivial. There's a reason Satoshi put a limit there in the first place.
I don't see how segwit helps here (how it does "instantaneous" stuff?), more like other way around: by ensuring small block side it grants perma-queue and therefore confirmation delays
Segwit as it is currently implemented removes the fixed block size, and replaces it with a variable block size which is 2-4x larger than current blocks. So it is very much the opposite of what you describe.
Bitcoin cannot survive without a permanent transaction backlog once the block reward subsidy is gone. Either we move to having inflation or there is a backlog.
I also see that some people worry that using bigger and bigger block sizes could end up "concentrating the mining power in the hands of a few miners" but since that already seems to be the case I'm not sure it's a very good counter argument.