[K-A]

IMO the reasoning for this is the 5 is built as a family Sedan with styling at the forefront of proportionality rather than utility. The E Class is the opposite as I can first hand attest that it makes MUCH better use of its space, but comes at less styling-first proportionality.

The 5er is large, but a lot of that space is due to the super long long hood and beefed out sheetmetal, and the way the doors are cut is meant to give it a more slung back look. With more knee room they would have had to elongate the rear doors which could have sacrificed a less sport profile.

The front seats of the E Class feel like you're sitting in a large living room, while the 5's cocoons you more. In my E, my head wouldn't even reach the B Pillar, while in my 5, my head is literally aligned with the B Pillar. Again, the 5's proportions I feel are "large" more for styling purposes (and because it's on the 7 Series platform) and then the functionality is more merely a compliment to the styling. The E Class for example is the other way around.

As a guy with no kids or back seat often rides, I feel this is a benefit as I wanted something with some utility and size, but not "sacrificed" to be a perfect people hauler. My E Class always felt so well thought out as a people hauler, while my 5 feels more utility-sacrificed for the sake of styling and sportier interior seating positions. For others who expect a large car to give large utility, I can understand the beef.