Desktop computers aren’t getting much smaller. Whitebox PCs often still come in a full “midi” tower case, brandname department store things are usually microtowers, and then there’s a bit of a gap until you’re looking at laptops (pretty much as small as you can make a computer while still keeping it usable by ordinary humans).
There’s good reason for this. A full ATX board will give you six or seven PCI slots (or some combination of those and PCI-E), micro-ATX usually has two or three, and until recently, you often kinda needed that room to expand. Onboard sound was frequently crap, and rarely had better than two channel (stereo) output, so you’d want a decent PCI soundcard; onboard video was generally the same; and there was that tender period before onboard SATA where controller cards for that were useful.
Small form factor PCs have been around through most of this, but were never really popular. They were often cramped, full of nonstandard and irreplaceable parts, and way too expensive for what you ended up with.
Now, though, everything’s grown up a bit more, and you can get a very decent computer the size of a shoebox for not a lot more than you’d pay for one a lot bigger.