I understand that there is a penalty for large block sizes and the miner who finds a large block only gets a portion of the nominal reward.
But I fail to see how a miner, who just "packs" transactions in a block, can control the size of the blocks he or she mines.
As a miner, is there anything you can do to limit the size of the blocks you mine?
But I fail to see how a miner, who just "packs" transactions in a block, can control the size of the blocks he or she mines.
Exactly like that. You pack until you get to the target size. Then, you simply don't pack the rest of the queue and leave it for the next block. Or you swap low fee tx-es with ones with higher fee, still keeping the size below the limit. You can choose any packing strategy you want, as long as you're able to express it with code.
It's a dynamic process. Any change gives a different hash and could become the winning block if it hits the target. Then, you submit what you had and start with next one.
