Earlier quoted context omitted.
PS5 and XBox support Blu-ray discs with capacities up to 100 GB. Both GTA V and GTA IV used multiple discs (there was an installation disc and a play disc). Heck the PC version of GTA V required 7 DVDs: https://www.reddit.com/r/pcmasterrace/comments/18hkrvj/you_c...
The bigger difficulty comes from the increasing complexity of games (feature wise) and their release state. It's effectively impossible to release a "gold version" game to the quality standards of ~1990 physical media, in 2026. The surface area for potential gameplay bugs is too large: it'd take another decade of QA polish. So even if you have physical media for the release day version of a game, what can you do with…
As far as bugs go, the solution for this has been and continues to be that after you install the game from the disc, you download a patch to update it. It's been this way for almost 20 years now (XBox 360 and PS3 both launched with explicit support for this).