“That” was the result of the British Government, who basically insisted on it, and the League of Nations agreed. Remember ... Britain was “the power” in the world at the time and they controlled the region.
Therefore, the area was cut down in size, because of the British government, and was thus enshrined in the Palestine Mandate.
One other thing to keep in mind is that the Jewish representatives of the “soon-to-be government” of Israel, wanted the United Nations to PARTITION the Palestine Mandate into two parts, in 1947 ... the Jewish part and then the ARAB part.
AND ... the reason why the Jews wanted that United Nations Partition Plan of 1947, and why they fought so hard to secure that Partition, and why they celebrated when they got that partition at the United Nations ... is that if it remained “one land” (as the Arabs wanted it) ... the Arabs OUTNUMBERED the Jews by 2-to-1. The Arabs wanted it that way so they could OUTVOTE the Jews in the new government. The Jews WANTED the partition, as it followed the “demographic” for a JEWISH POPULATION, so that they would have a national homeland “for the Jews”!
You are very correct. It should also be noted that the Balfour Declaration did not establish a Jewish state, but a Jewish home. That was intentional because, as you mentioned, Jews were out numbered by Arabs. At that time, Jews wanted a British protectorate until more Jews could settle so they would be in the majority. Once a majority was established, then a state could be formed.