What stops them from reducing the huge bezels and fitting an 8" or even 9" display in there? Is it just that 7" displays are far more common and thus cheaper?
I think it's because this form factor can be 3D printed; smaller bezels and you need more specialist design and materials that can't easily be reproduced and need to be built in minimum size batches in factories.
MNT's production runs are not big enough to drive novel display formats. They use off-the-shelf displays. Their other laptop, the Reform, has a list of about four models of LCD that will work.