I'm going to have a crack at answering this question. It's late and there's a lot to discuss, so forgive my typos and organization. I've also been working on this for many hours, and it's already 2 in the morning, so I'm afraid I'll have to continue my response some hours after I've posted this initial one. I hope this is okay, it already partially answers and illuminates some of the things brought up in the question.
^^edit ^^1: ^^I ^^accidentally ^^deleted ^^two ^^paragraphs ^^of ^^followup. ^^I'll ^^need ^^to ^^rewrite ^^them, ^^and ^^retrace ^^some ^^sources. ^^I've ^^also ^^included ^^additional ^^information ^^regarding ^^Japan. ^^Will ^^then ^^discuss ^^modern ^^statues, ^^and ^^finally, ^^criticism ^^and ^^issues.
^^edit ^^2: ^^I ^^have ^^a ^^third ^^comment ^^discussing ^^modern ^^statues, ^^which ^^is ^^what ^^op ^^is ^^referencing. ^^There ^^are ^^less ^^readings ^^available ^^than ^^with ^^pre-modern ^^statues, ^^but ^^I've ^^tried ^^to ^^shed ^^some ^^light ^^on ^^Chinese ^^and ^^Japanese ^^projects. ^^I'm ^^reaching ^^the ^^limit ^^of ^^my ^^ability ^^through ^^fatigue, ^^if ^^possible ^^I'll ^^have ^^one ^^more ^^section ^^on ^^the ^^criticism ^^of ^^these ^^"ostentatious" ^^art.
^^edit ^^3: ^^It's ^^5:20 ^^am, ^^I ^^will ^^polish ^^up ^^my ^^grammar, ^^writing, ^^and ^^formatting ^^when ^^I've ^^gotten ^^some ^^rest. ^^There ^^may ^^also ^^be ^^some ^^small ^^technical ^^errors ^^to ^^fix. ^^For ^^now ^^I've ^^addressed ^^most ^^of ^^what ^^I've ^^wanted ^^to ^^say, ^^if ^^there's ^^anything ^^else ^^that ^^comes ^^to ^^mind ^^I ^^may ^^add ^^it. ^^Cheers ^^all.
^^edit ^^4: ^^Fixed ^^some ^^things.
Part 1 - Background in Understanding Buddhism and its Visual Aesthetics
Firstly, I find the question somewhat problematic in discussing Buddhism and its ideals. Without going into too much detail and losing focus on the main question at hand, it's crucial to discuss how popular western understanding of Buddhism is heavily built upon the work of Buddhist propagation in the 20th century. In the 1900's onwards, Buddhism would begin to truly take hold in Europe and America as a practice, where previously knowledge of the religion (and I do say religion, this is a wholly separate and complicated argument and matter which we will not explore not) mostly came from explorers, missionaries, historians, and philosophers. Theravadin Buddhism occupied the most interest in the first half of the 20th century, accessible due to colonial presence in Theravadin countries. With Japan's defeat in World War II, Zen came to be truly globalized. Tibetan traditions also have a notable presence, greatly due to the political situation of the Chinese invasion of Tibet and the Dalai Lama's subsequent flight and advocacy work. A second wave of immigration from Southeast Asia can be credit from -political, economic, and social instability, prompting growing communities of Vietnamese Mahayanan and Southeast Theravadin traditions.
Why do I mention all this? Because the practice of Buddhism in the west is noticeably different than in Asia. Whereas Western Buddhism heavily focuses on and specializes in meditation and contemplation, the various kinds of Buddhism in Asia treat the religion on a much more intimate, everyday, and cultural level. In the same manner a churchgoer interacts with the community through practice, ritual, holidays, etc, the Buddhist in Asia does not only focus on the dharma, but the relationship with the laity and the monastic. Historically, the monks were the vanguard of the tradition, and they served the community by offering the spiritual, moral, ethical, ritual, educational guidance. Laypersons were observers and offered whatever was necessary to sustain the monastery. The differences in proportion of layperson to monk in the west and east must also be highlighted. Fewer ordained and qualified teachers in the west means the entire practice of Buddhism needed to change, and the monk-layperson relationship drastically adapted to new conditions.
As such, there have been efforts to alter, deemphasis, and deminish the religious and worship aspects of Buddhism, to be compatible with spiritual trends and social circumstances of the mid to late 20th century. We must understand that Christianity's overwhelming historical presence in Europe and America has heavily impacted society and culture. Alternative options to the dominant norm are always sought after, and Buddhism is one of them. This was especially the case in the 20th century, with the growth of New Religion Movements and a tendency to look towards Asia as a guide for spirituality. This further shapes how Buddhism is to be shared and taught with a different kind of audience. (This is why we also see differences today with American Buddhism and Ethnic Buddhism, the kind practiced by ethnic and immigrant communities.) Meditation and personal insight as a means to achieve liberation and spiritual cultivation is a major focus accessible to the laity in America and Europe. It is not just something reserved for the dedicated monks, the common layperson can participate too. And this is compatible with western conditions, as Buddhism offers a path that isn't in servitude towards a God or higher being, but rather, the personal self. This is why we might mainly focus on or understand the dharma and its ideas as concepts such as the paramitas and the Four Noble Truths. It is also critical to distinguish detachment from asceticism, which is something discussed in the Middle Way and cautioned by the Buddha. Asceticism is an extreme, not encouraged in Buddhism. However, there are historical instances of intensive devotional acts, but this cannot be considered the norm. The lifestyle of the monastic is certainly rigid, restrained, and intense, but ascetic is somewhat of a misleading term.
To return to my main point here, Buddhism in the east and west are engaged and understood differently. We may understand parts of the dharma as removing attachment, reliance, craving, towards material and impermanent things. These elements, of course, aren't neglected in Asia, but the Buddha and other Buddhist figures represent other ideas of wisdom, salvation, guidance, and meaning. This is why you may find gilded figurines and statues in Tibet and Southeast Asia. Why the offering of merit is so crucial to Burmese society. Why temple goers regularly prey and offer incense in China. Simply put, aesthetics, images, and physical, consumable, and tangible things help one to understand and engage with Buddhism. This is effected by, effects, and intermingles with culture of whichever society Buddhism is in. Ostentatious art is just a natural result of this.
Part 2a - Answering the Main Question, On Statues and Grandiosity
Okay, so now that we somewhat understand why some arts and aesthetics of Buddhism may be fanciful and extravagant, why are Buddhist statues so darn big?
We must explore this by dividing time between the pre-modern and modern world. Firstly, we can consider the ancient world and earlier Buddhism. I will try to create a narrative from three examples, Central Asia, China, and Japan, each relying on the preceding civilization with the transmission of Buddhism and its art and practices.
Buddhism originated in the Northern India/Nepal region, and made its way south and west. Buddhism would take an immense hold in Gandhara/Central Asia, up until the great social changes of Islamic conquest. As such, Buddhism spread through the Silk Road, and would be impacted by other ideas with it. Alexander's conquests brought the importance of Hellenistic culture to Persia, Central Asia, India, and China. This is significant as the Greco-Roman valuing of the human figure would dramatically influence art in the aforementioned regions. There is some debate in art history regarding the significance and impact of cultures on one another, though. Large statues of human-like and animal figures existed in Egypt and the Achaemenid Empire. Subjects can vary, be it royalty, rulers, deities, or other mythological figures. Nevertheless, it could be fair to suggest that Hellenistic, Egyptian, and Persian aesthetic values had some impact on Central Asia.
This is why the Bamyan Statues, destroyed in 2001 by the Taliban, are/were such important examples of early Buddhist art. Previously, depictions of the Buddha and other Buddhist figures in the Gandharan region might take form in stupas and statues, but those would not exceed 10m/33ft in height. The larger Buddha in Bamiyan was 53m/174ft in height, while the smaller was 35m/115ft. Not only that, the famous monk-traveler Xuanzang describes them as to be decorated with precious stones and gold. These large statues would be an imposing and awe-inspiring site, one highly praised by residents and visitors alike. It would also represent the devotion of the people, the power of the ruler, and the admiration and respect followers would have towards the Buddha.
I am a scholar neither of Buddhism nor of Buddhist art. Since I have, however, had occasion to read about the Indo-Greek origins of Buddhist monumental sculpture, I'd like to offer a few provisional comments while we wait for an actual expert on the topic.
First, to make an obvious point, most of those mega-Buddhas were set up in the last 25 years, and should thus be interpreted in the contexts of national/regional pride and modern economic strength. They do, however, draw on an ancient tradition of colossal sculpture - as attested by the world's 18th tallest statue, a ninth-century Buddha near Leshan, China.
I cannot pretend to trace the combination of religious, economic, and political factors that underpinned the creation of any particular image. But I can call attention to the fact that the tradition of monumental sculpture in Buddhism was very likely inspired, at least in broad outline, by Greek artistic conventions.
After Alexander the Great conquered the Persian Empire, substantial numbers of Greeks settled in Bactria - roughly northern Afghanistan and Tajikistan - bringing their language and culture with them. To take a famous example, Ai-Khanoum, a Greek city in the heart of northern Afghanistan, had every amenity of a Hellenistic polis: a gymnasium, a theater, and - most pertinently - dozens of statues depicting gods, heroes, and local worthies. A few of these statues, such as the cult image of Zeus in the city's primary temple, were colossal.
Ai-Khanoum itself was wiped off the map by nomads in the mid-second century, and the Greek kingdom of Bactria lasted little longer. Many of the Greek settlers, however, fled south into what is now northern Pakistan and northwestern India, which had been a province of the Bactrian kingdom. In this region, a motley assortment of Greek kings reigned, and occasionally ruled, for another century and a half, presiding over a realm in which Greek religion and Greek art coexisted and intermingled with their Indian counterparts. A remarkable number of Greeks converted to - or at least publicly expressed sympathy for - Buddhism, describing themselves as "Yavanas" (a corruption of "Ionians") in dedicatory inscriptions etched into the walls of Buddhist caves.
The Indo-Greek kingdom disintegrated around the end of the first century BCE, and its territories were soon absorbed by the great Kushan Empire. But in Gandhara, part of the old Indo-Greek heartland, a remarkable artistic tradition, clearly inspired by Hellenistic conventions, continued to thrive. There is some scholarly debate over whether the Greek element so evident in Gandhara art should be understood in terms of Indo-Greek survival or fresh influence conveyed via the Hellenophile Parthians. Whatever its sources, however, the depth of this Greek influence is impossible to deny.
It was in Gandhara, and during the first century flowering of that region's characteristic Greco-Buddhist art, that some of the earliest known sculptural representations of the Buddha appeared. Until this point, the Buddha had been represented aniconically - often by footprints, a tree, or a stupa. Now, in Gandhara, he began to be represented as a man, in statues that blended traditional Indian depictions of yakshas (nature spirits) with Hellenistic clothing and artistic conventions. This statue is a good example.
Sculpture on a monumental scale was not, of course, a purely Greek innovation. But it was the Greek-inflected Gandhara tradition, which spread through the Kushan Empire, that dominated the iconography of the colossal (and now tragically destroyed) Bamiyan Buddhas, which may have been begun as early as the third century. As you can see in this picture, the robe of the larger Bamiyan Buddha was characterized by the Hellenistic-style drapery of the Gandhara style.
Does this mean that the colossal statues of the Buddha carved in Central Asia and (later) in China and Japan were directly inspired by the great cult statues of Greek temples? Of course not. Artistic influence is never so simple. But I do think that, in the distant lineage of all the gargantuan Buddhas on Wikipedia's big statue list, you'd find a little Greek DNA.
This, again, is only a partial answer. But I hope that it can at least complement the definitive response that a true expert will (hopefully) provide.
A similar question has been asked before and answered by u/troymcclurehere here about how the creation and gifting of Buddhist artworks was a way to generate merit, which may help you.
I am no historian, but a study of Buddhism in Japan has been a large focus of my studies in university lately, and I am a student of history. In an extremely oversimplified layman's terms; (forgive me historians who know a LOT more than me, I may be wrong in some respects)
To say Buddhism is all the same is like saying Catholics, protestants, Mormons, and Southern Baptists (among the many, many others) are the same.
In Japan, historically many sects believed that contributing to a great project like the building of a statue to honor one of the Buddhas could have been seen as a way to get closer to enlightenment or intone the mercy of said Buddha. It was similar to tithes and donations in the Christian church for many sects of Buddhism.
This doesn't directly answer your question, but I hope it contributes to understanding why some sects do have a greater focus on statues and material representations of spiritual things.
Simply put, to the western student, sometimes Buddhism feels like a paradox or inconsistent, but to people in the east these paradoxes are often wholly and readily accepted.