It's all punish punish punish seems to be the problem, and no reward. All negative results from playing wrong, but no positive results from playing right except for not being punished.
That's just not good design.
When it's just numeric differences, those are the same thing. You're rewarded for deleting superfluous stations, for example, with increased tech progress.
Which is why good game design says not to make the differences all numeric, and instead make the changes mechanical.
But even taking away all the mathematical bonuses and reasons to play tall, playing tall just isn't as fun as playing wide. Playing wide has a lot more sense of movement and motion, imo, than playing Tall does, unless playing a Tall suzerain. But then that's just Wide with an added constraint. There's still nothing really that shakes up empires, or really anything interesting to do in space you already own that doesn't have a feature locked behind a tech or large battle. Once all those have been exhausted, all that remains is plopping buildings on little grids, trying to eke out one more energy credit to add to your massive pile.
Note that CKII and Vicky II don't have this problem, but EUIV does (to a lesser extent). EUIV is also the most map-painterly game of the three, and the one most focused on expansion. The mechanics of Stellaris work to incentivize expansion with fun, rather than mechanical benefits, so when the devs respond by slapping negative modifiers on there all they end up doing is slapping the playerbase away from the fun things and pointing at the unfun things, which is not the point of a game to begin with. There needs to be not only mathematical but extra-game reasons to play Tall; there needs to be more involved governance, diplomacy, and politics. Otherwise, people will continue to blob because that's the only way Stellaris is really any fun. Special mechanics for small nations, or mechanics that grow more interesting the smaller the empire. That sort of thing. That's a real reward, not a +10% laser fire rate. Who gives a damn about that, the AI is pathetic anyway.