That's 'cause the F-35 still doesn't have 360 deg capability. It's unlikely to get it anytime soon either. Secondly, most air forces are still operating 4th gen jets that need AWACS support. The transition is still happening. Of course, better jets than the F-35 are necessary as well. Plus drones, those are yet to exist. So the E-7 is a stopgap until new tech comes in. Even after the new tech comes in, it needs to be introduced in numbers, so something like the NGAD will need to be inducted in enough numbers to take over the role of existing jets. All that will need at least 10 years after the tech is introduced, maybe sometime in 2030. So the E-7 will be needed until 2040 or so, naturally makes sense to get some now to deal with the obsolescence issues plaguing the E-3.
In the IAF's case as well, even if the Rafale F4/F5 etc are capable of operating without AWACS support, the rest of the fleet of MKIs and LCAs will still need AWACS. And the Rafales will take at least until 2035-40 to come in numbers, followed by AMCA until as long as 2045. So crewed AWACS is needed for the transition period.
The only 360-degree sensor the F-35 (or any other existing jet) has is the passive EODAS or equivalent like DDM-NG. And that capability is already present. No fighter is planning to get 360 degree radar, the Su-57's rear radar is a myth. Even the smaller side-scan arrays on that jet only exist to enhance the FoV of the front, so that it can continue to maintain track of a target designated by the main radar even after it starts to maneuver away. Those radars are not meant for volume search & most likely cannot acquire targets that the main radar can at the same range, meaning the initial track by the main radar is important to tell them where to focus.
On the F-35, the EODAS is actually capable of doing the same thing, but passively. So its actually the better system. I'd assume the same is true for Rafale's DDM-NG/FSO combo, but it's possible its not as good, so the French may go ahead with conformal side arrays to do that job instead. Remember the F-22 was originally meant to have conformal arrays too, but they dropped it after EODAS proved that this could be done passively on future aircraft which is way better.
But neither of these are true 360 degree radar surveillance capabilities which is what you need against non-cooperative targets.
As of future jets, nobody knows what radar configurations they will have - no one has even talked about 360 degree radar for Tempest/FCAS, correct me if I'm wrong.
Otoh, IN's air wings are specialists. It's just 1-2 squadrons strong which makes the replacement and transition period very short. So more modern capabilities can be introduced much more quickly, which is what the Royal Navy is doing with the Vixen. To the RN, the Vixen+F-35 combo is more than enough to replace crewed AWACS.
The Vixen is a necessity brought on by the Brits' lack of a Catapult on their carrier. Their rotary wing platform is not very capable wrt speed, altitude or endurance (and even otherwise, CROWSNEST is a bit of a failure), and they can't launch a fixed wing. If they had that, the story would have been different. The French for example plan to use Advanced Hawkeye alongside FCAS & Rafale on the PANG meant to be commissioned by 2037. Two fighters which you say have no need of AWACS - the Marine Nationale must be crazy wasting all that space for planes they don't need.
Furthermore, what makes AWACS necessary for now is there's still the human element involved in sensor fusion. Once that's done via AI, which could happen relatively quickly, the air crew will not just become unnecessary, but a liability. So what the F-35 does automatically, the AWACS crew do manually, which is why a lot of personnel are needed, alongside a commander who has to manage the team, which also means crewed AWACS are unable to keep up with what the F-35 does instantly without pilot intervention. So the AWACS has already become a liability to the F-35 in this era, let alone what could happen 10 years later.
The IAF believes automated sensor fusion across the entire battlespace can be achieved by 2030. Which means more advanced countries are probably already in the process of doing it, especially countries like France with significantly smaller number of assets to fuse.
It's cuz the existing AWACS electronics are broadly outdated, their souped-up versions of 1970s electronics. The E-7's electronics will be as snappy as the F-35's if not more - remember they're launching a new R&D program for USAF E-7 so its going to be a newer configuration than F-35, plus the 737 won't be having the same space & weight constraints which could have prevented many of the latest & greatest technologies from finding immediate application on fighters. That includes AI and additional processing power via MDPUs - and bigger APUs to drive them.
A modern-day cellphone is more powerful than a 1970s supercomputer, but its still nothing compared to a modern day supercomputer. No fighter can carry the amount of processing power a 737 has the room for.
Those radars are actually small. There's nothing big about them. Those are L band radars, with TRMs that are 10-15cm long, X band uses 3cm TRMs, hence the difference in size. The antenna coverage is pretty much the same. In fact, larger fighters have over 2x the TRM density of AWACS radars. Meaning, fighter radars are more capable. It's actually incredible for airborne FCRs today to be able to match airborne surveillance radars.
The THAAD exclusively uses only X band for both surveillance and fire control. Ships as well use S band for surveillance and fire control. Which is why these radars are called multifunction. This includes MF-STAR, it's in the name itself. So fighter jet radars have now begun to achieve that level.
They are longer in terms of depth, not laterally.
So in terms of packing in more TRMs, what matters more is the actual manufacturing process used - which keeps getting smaller all the time.
The new USAF E-7 config is almost 20 years newer than the F-35's radar. But in the end, it won't matter because in order to achieve S/L-band levels of performance (especially against VLO targets), you need to combine the outputs of several X-band TRMs and process the signal as one, something which the E-7 does naturally due to its native band.
When your longer-wavelength radars are outdated and/or unresponsive (like E-3), there is merit in asking the fighters to do this. But when your S/L-bands are up to speed, using X-band in that role has no benefit. It cannot do a better job than an actual S/L-band AESA four-five times its size.
They resorted to using X-band for THAAD because X-band TRMs became viable first, and the jump in performance compared to mechanical scanning or PESA was so massive either way that it made sense to resort to X-band. But as you can see, that period is over and the S-band SPY-7 LRDR is now replacing X-band as the primary discrimination radar for GBI/GMD. Could be the case for THAAD in the future too - the TPY-2 is a 90s technology.