But! the Rollei 35 was a "full frame" 35mm compact ...
Did you miss my comments about focal lengths desires and maximum effective aperture diameters? The Rollei 35 models had only a fixed 40mm, of at best a rather sluggish f/2.8 or in other cases an even worse f/3.5. So at biggest a 14mm effective aperture diameter: that measure along with actual focal length is probably the iron constraint on lens size, and thus on overall camera size. And it get far worse with zoom lenses than with primes.
... physics has not changed, computer design has gotten better so why not a full frame or apsc compact lens?
One thing that has changed dramatically is sensor cost comparisons between formats: 36x24mm format film and processing was about as cheap as or cheaper than smaller formats, thanks in part to its economies of scale, and printing costs dominating over film and processing costs for most photographers. So it made economic sense to achieve a compact camera with the combination of slow lenses and fast 35mm film in competition with smaller formats. (That is how 35mm film compacts eventually killed the smaller format Kodak Instamatic 110 and disk cameras.) With electronic sensors instead, there is a huge cost disadvantage to 36x24mm format compared to smaller formats, for reasons that are debated perpetually in this forum and elsewhere. Also, the IQ differences between 35mm and smaller formats are far less with today's sensors than they were with film: a far greater proportion of photographers are satisfied with the IQ of digital formats like "APS-C" or 4/3" or even 1" than ever were with film formats that small, so the demand and willingness to pay the price and size premiums for 36x24mm format is less now that it was with film.
And to repeat yet again because it keeps being ignored: the size issue with making good use of a larger format is mostly about _lens size_ far more than body size, as soon as the user wants focal lengths significantly longer than normal. I agree that it should be technologically easy enough to fit a 36x24mm sensor into a very small camera body, since for one thing the standard 3" rear LCD is far larger than that sensor (about 60x45mm), but to keep the complete working camera compact, focal lengths are severely limited, unless pointlessly slow zoom lenses are used in order to keep the maximum effective aperture diameter small and so keep the front lens elements small and light.
I agree that if enough people were wiling to pay about $2000-3000 for the combination of a relatively expensive 36x24mm sensor with either
- a single focal length (like the 40mm of the Rollei 35) or
- a very limited telephoto zoom range, or
- a zoom lens that is ridiculously slow at the long end (like the f/8 to f/13 at the long end in the compact 35mm film cameras with wider ranging zoom lenses)
it would be _technologically_ feasible to make a compact 35mm format digital camera.
But I suspect that the demand would be so small that the price would be pushed even higher, to $3000 or beyond, in turn reducing demand ... The pricing of Fujifilm X-Pro 1 body and lenses compared to other systems with the same sensor size illustrates the price premium for non-mainstream options.