Okay this isn't wrong but it is an oversimplification (I believe probably a deliberate one for comedy purposes) and you've activated one of the things I know a lot about, SO.
Long ago everyone's clothes were made for them custom, and were either so unfitted that it didn't matter how you were shaped or they were created with built-in size adjusting elements so you could adapt them to your body as your body changed. (Lacing is great for this.)
Then we got into the era of ready-to-wear clothing, where you could walk into a shop and buy something. These were still being handmade probably on site (or in a workshop very nearby), and were created with the assumption that the purchaser would make any needed alterations to get the fit they desired. This was also in an era where it was expected that you would achieve the fashionable silhouette via shapewear and padding and tailoring - like, fat women in the Victorian era also wore shoulderpads and hip pads, because the fashionable thing was a particular set of proportions and it was not expected that people's bodies would meet those proportions unaltered.
Then we got into an era of mass-produced ready-to-wear clothing, where you'd have size sets of a particular pattern made into multiple sizes of that garment. This is where numbered sizing or the XS-XXL size runs start to show up. We start to lose the assumption of tailoring as a normal part of the process (and some clothes are not being designed for tailoring as an option), and also where we get into Foz's thing about clothing being made to fit one (1) woman.
A fashion house/clothing manufacturer/designer ideally draws a design, then creates a pattern for the design, sews a sample (or more than one sample if they have a few ideas to test out), and then they bring in their fit model and have her try it on. The fit model's job can be as uninvolved as "standing there and letting people poke at the garment and pin it in various places" or as involved as "doing some aerobics and telling the designer how the garment functions." A fit model is not a runway model - the fit model needs to maintain a consistent set of measurements, but that set of measurements depends on what the designer has designated as their sample size. Women's fit models are frequently a size small, I'll admit that up front, but that's not universal. (The company where my wife works, which makes athletic wear, recently switched from a size small fit model to a size medium because they found that hewed more closely to their target market.)
Once the garment has been fitted to the model and all issues worked out with the pattern, the pattern will be graded to create the rest of the sizes in the set. This is where Foz's "scaling her up or down like a photo in MS paint" bit comes from, which is indeed what happens when you don't pay for a skilled patternmaker. There are grading rules assigned to the pattern to make it larger and/or smaller depending on the direction it needs to go, and if those grading rules have been applied correctly and customized as needed, the resulting pattern and garments should actually make sense for human bodies of a similar proportion to the original fit model.
...unless you want an extended size set beyond the XXL, because it's 100% correct that you can't keep grading up a Small pattern indefinitely - that's a surefire way to end up with clothing that has absolutely bewildering proportions. A designer that actually cares about providing extended sizing will, usually at that XXL break, create an entirely new pattern, sew up an entirely new sample, and hire a fat fit model to test those samples on. This is why you'll see straight sizing and plus sizing listed as separate categories on some clothing retail websites - they're different lines created from different sample sizes.
The company where my wife works has been putting a lot of effort into developing an extended size range, including shopping around for size set information from some of the big sizing companies to find one that works (some of them don't even offer extended sizing datasets!!!), testing out different plus-size dressforms, and auditioning a bunch of fat fit models. (I've seen the fat dressform they ended up with as their extended range sample size and I'm actually really impressed with it - like it even has a belly pooch! It looks like a person!) Then they had to made the designs, and sew the samples, and try them on the fit models, and then because they're an athletic wear company that cares about function they got wear testers to actually use the garments for their intended athletic purposes and report back about what worked and what didn't, and then take that wear testing into account and tweak the patterns, and and and...
All of this costs money, obviously, so what if you're cheap? Well, you might not offer any extended sizing at all, because keeping to one size set is a great way to lower your costs. What if you're even cheaper than that? Well, you don't technically need a fit model, right? You can buy a data set of sizing information from one of the big brokers and work directly from that, no need for pesky in-person fittings or feedback. You can make your patternmaker auto-apply grading rules to get your size set, and send that to the factory without bothering to tweak it or adjust it in any way. Then you can make garments that have minimal seam allowances, so it's almost impossible to alter them, out of the cheapest fabric possible, so they fall apart after three washes. It doesn't matter if they don't fit well because you're already moving onto the next thing, and the consumer get the cheap clothes they demand, and no one's happy.
[slaps down Uno card] THE PROBLEM IS CAPITALISM!!!
This also doesn't even get into the different fit proportions of different designers - like, I love Morningwitch's designs but their fit of choice is "boxy," aka garments with very little in the way of shaping. I do not enjoy wearing boxy garments, so I know if I buy a Morningwitch garment that I'll have to make alterations to it in order to get the fit I want. On the other size of the spectrum you have a place like Trashy Diva, which is deliberately going for a vintage Hollywood Starlet Va Va Voom type of fit, with things that are fitted through the bust and waist but flare out at the hips. Both of these shops have an extended size range, but their fit priorities could not be more different from each other!
Listen, the fashion industry has a lot of problems, I will not deny that, but the people on the garment side of things are not all locked in a vast conspiracy to make you feel bad about yourself when the clothes don't fit. It's a massive interlocking puzzle of market pressures and technical requirements and it's complicated by a consumer market that 1. has been trained to constantly expect new designs all the time and 2. has been trained to think they shouldn't have to pay more than $20 for anything ever. Clothes that have been fitted to a fit model are actually made to fit a person, and if you have similar proportions to that fit model you're golden. It costs more to have a fit model, though, and it is an annoying amount of work to try to find a company with a fit model that matches you, and we'd all be a lot happier if tailoring was an accepted, normal part of clothing purchases and our clothes were made with tailoring as an expectation.
We also need to dismantle and regulate the fast fashion business model out of existence, but that's a different conversation.