I’ve stayed in both ‘international’ hotels that cater to foreigners and in business hotels which explicitly discourage foreigners by having literally everything in Japanese and they’ve all had fairly standard sized rooms for a hotel.
When I visited, I stayed in a business hotel in Ikebukuro, a ryokan near Chidorichou station, a youth hostel in Kyoto, and a hotsprings hotel in Hakone.
The business hotel's room was tiny (as described by the person your replied to). The ryokan's rooms were a very nice size. The hostel's were tiny (either 4.5 or 6 tatami?), but the bathrooms were down the hall, at least. The hotel in Hakone had decently-sized rooms, but not as large as the ryokan. I don't remember them being any more cramped than when I've visited cities in Europe, anyhow.
From the part that mentions that they are "international hotels that cater to foreigners" -- so not some local cockroach hotel for junkies and poor people (not to mention the fact that they need to have enough money to travel to an expensive country like Japan in the first place -- 2/3rds of the world couldn't even afford the tickets with a year's salary).
And from the other part that mentions "business hotels" and especially ones that "explicitly discourage foreigners". Except if those are the rare kind of business hotels for poor destitute businessmen.
I think maybe we have a mismatch of cultural expectations. When I traveled in America I saw a lot of those junkie hotels - they're simply not really even thought of as viable hotels in my country. When you drive America you see America is poor.
An actual example from two of the categories I've actually stayed in.
ANA Crowne Plaza Okayama - $116AU a night. Not shockingly cheap, but cheap nonetheless.
PRINCE something something, in Osaka. 6000JPY a night on a public holiday.
No matter your definition of cheap, they're not 'expensive' hotels.
How fancy, must be a Western-style room. In a Japanese-style room you get nothing but a mattress.