most car manufacturers, more so during that era, were concerned with making the car appeal to the masses. this typically meant a smoother ride and probably cheaper rubber.
its fine to put larger rims on any car, it just makes it ride a bit rougher. this is directly proportional to how well the car handles, particularly in the corners. the thinner the profile of the tire, the better the performance handling characteristics.
yes, bmw does know what its doing, but at the same time it can take larger rims. speaking strictly about wheels, thats the major difference between a regular 3er, and that same car in ///M form.