Is bandwidth from outer space so expensive that you save money by moving compute to the edge and only pushing down results to earth instead of the entire data set?
The bandwidth is not expensive. There is simply a lack of it.
Most LEO satellites have 10-20 minutes a day communications window assuming single ground station. Amount of data you can download from a single pass is a tens or hundreds megabytes per day. One high-resolution camera image can be easily over 10MB.
There is plenty of bandwidth to achieve more than 1 Gbps of throughput from a 3-U cubesat (see Planet with their latest X-band comms-system [1], which results in more than 50 GB per pass). If you really need more than that, new free space optical communications systems under-development will bring multi-Gbps to small-sats [2]. For me, the real problem with nanosats is that they generate barely no power and they are really volume-constrained compared to the bigger birds (so you cannot have high-resolution sensors, and cannot fit in there a good optical-comms system, you need to be mindful of your power consumption all time during the mission...).
Finally, note that nowadays Planet downloads 10 TB/day, and they could go up to 40 TB/day once they upgrade their fleet with the latest X-band antenna, which is comparable to the 80 TB/day that DigitalGlobe generates.
Most LEO satellites have 10-20 minutes a day communications window assuming single ground station. Amount of data you can download from a single pass is a tens or hundreds megabytes per day. One high-resolution camera image can be easily over 10MB.