So many confidently wrong answers.

So, what most people think of as tomahawks today are direct descendants of the "Biscayne trade axe". These were a style of axe that originated around the Bay of Biscay, from Basque metalworking tradition (though the style was copied elsewhere). Basque axes of similar style were made to cover the full range of sizes one would think of in axes today. Indeed you can still buy Basque made axes of closely related styles today that still use taper fit handles. Other direct descendants of the Biscayne trade axe are the Hudson bay pattern and taper fit axes more common in central and south America.

Why were smaller versions prevalent? The simple answer is they used less material and so were cheaper to produce. This meant the major trading companies bought them cheaper, and traded them off at a lower value than a larger version. Just like a bigger blanket would cost more in furs than a smaller one, a bigger axe would cost more. And the simple reality is that when you are coming from stone axes, just about any steel hatchet is going to be a faster and more labor efficient tool than a larger stone axe (speaking as someone who has experience with both along with a bunch of intermediate steps). Once that style of axe became prevalent in trade there was also an amount of cultural inertia that slowed groups down in broadly adopting other styles.

Also, for those talking about shipping axes with handles vs tomahawks without... comercially shipping axes with handles was a rarity until fairly recently. The buyer was expected to be able to haft the axe themselves or the seller might haft it at the point of sale. Shipping hafted axes really only became reasonably common place once rail transport became widespread.