Regarding initial iOS performance envelope: the processor’s 412MHz clock rate and 128MB DRAM were both about ten times larger than the Unix workstations that were happily running similar Unix, ten years previously. So it was just that the smallest computer that it was worthwhile building had caught up to the best software of the day (and none of the other phone manufacturers had noticed.)
Regarding the “use screen, keyboard and mouse with phone, because you can” game: this still doesn’t make any sense to me. Even in Microsoft’s example, in the picture: the box that you plug the phone into is the same size, and costs as much, as many actual desktop computers. The document that you were reviewing or working on, on the phone, is already in someone’s cloud. So how does re-using the resources of the phone help?