My guess, it's 35 like 135.
I suppose it is indeed "135", except that "135" refers to a type of film with rolls about 35mm wide, emulsion width about 24mm or a bit more, as used in both still and movie films. And 35mm movie cameras and projectors move the film vertically through the camera and so use a frame width of about 24mm. (25mm for the newer Super 35mm version.)
While settle for less?
If you mean "why settle for smaller than the 36x24mm of STILL camera 35mm usage":
maybe because there is a huge investment in cine-camera lenses designed for the current dominant 35mm movie camera formats like Super 35mm, such as PL mount lenses, and these would not be usable with that larger format.
Do some people imagine that the professional motion picture and television industry is ready to ditch all those cine-camera lenses in favor of using still camera lenses from Canon, Nikon and so on that are not designed for the cine-camera realities of precise manual focus pulling, avoidance of focus breathing, and so on?
Is this more of he endless delusion that the main trend of technological progress is towards larger, heavier, more expensive options, which in reality do have there place, but usually as a small and often shrinking share of the total market. 70mm movies did not displace 35mm did they?