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Can someone explain like I'm 5, how its possible to fit a TB of storage on something so small, and why if its possible to do that are they not used for everything?
1 bit of information in flash memory is stored using one cell. Each cells is very similar to a transistor in a processor. We already know that through years of development we can fit 100s of millions of transistors in a very small space - these days they're only a few thousand atoms big. If you look at any chip on a circuit board mostly what you're seeing is the plastic packaging - the actual functional area of the chip (called a die) is much smaller. Even a massive processor like an i7 is only a few millimeters square.
Flash can actually pack in even smaller than a CPU. The structure of cells is much more regular, and they can be packed in 3 dimensions as well rather than just laid out on one flat surface. And that's how you can fit a trillion memory cells into a micro SD card.
I have no clue, that's just science gone right. Having so many transistors packed so dense comes with various problems, temperature being the biggest affecting it in lifetime and speed.
Be happy that not every SSD has just one microSD with a header inside.
We don't use them for everything because they are much, much more expensive than other storage mediums.