Exactly. Some people have the belief that optical correction of geometric distortion is the best way, but it’s just one way. There are trade offs with that way, and with the digital approach.You are right that parts of the sensor are not exposed and thus "wasted", so that the image circle from further in has to be stretched outwards but only into the corners, as @neuroanatomist mentioned earlier, leading to a loss of resolution in the corners. Now, this sounds bad on its own, but since most lenses already fair less than optimal in the corners, particularly at lower prices, and as long as the stretching results in an equivalent image quality, we can benefit at "similar" image quality from smaller, lighter, and cheaper lenses.
What I am trying to say is that while this might waste some pixels in the corners, it is effectively irrelevant to us users, if we still get the same image quality as we would get from a not-wasteful larger, but still equally priced lens.
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