Never said you did, in fact I actually agree on this as I'll say a fundamental problem in 5 and 6 was that the setting was too spread out as you say, RE imo is best when it's in one well developed location like the mansion in the original or the village community in RE4 as then you really do feel like you're surviving to get out of the place. On paper it's smaller than 5 and 6 but in execution it's not much different in content, an example is if RE6 was solely Leon and Helena trapped in the university campus' trying to escape through all the various campus buildings as opposed to what the game actually turned out to be I may have actually liked it.

Imo a better approach is rather than a world apocalypse they should just do small isolated incidents as it allows for me freedom of setting and an easier to manage story.

Capcom is looking at us because of the reasons I said, RE before RE4 fell into decline because after RE2 the ideas were running dry and each new installment with the exception of CV was inferior to the last. The reason for this was because Capcom was only developing with the mindset that the average gamer liked this and that but they found out that the average gamer doesn't stick around and consistently buy the games of the series, the result is that by the time RE4 came along the series was in trouble and even people at Capcom didn't want to wark on the series as a result.

The average gamer may like RE5 and RE6 but as seen the was a decline in sales from the former to the latter and the may be another decline between RE6 to RE7 as a result of the inconsistency after RE4. To put it bluntly the average gamer is nothing more than a short term fix if fundamental issues aren't really addressed. RE5 wasn't hailed like you say it was it was seen as a decent game with a great co-op aspect, without the co-op the game was very average  and would have been panned while RE6 was panned universally by both fans and critics.