
Like a lot of other people here, I am using the Zero or ZeroW for small hardware applications, where I am usually fine with Jessie Lite and 2GB of SD (actually most time I don't ever expand the image to fit the full 2GB).
The problem here is that you can no longer easily find 2GB or 4GB SD cards on the market.
And a 8 / 16 GB is a additional cost, that can be relevant if you are trying to create low cost things.
This while at industrial level (where you can play), I believe you can now find 2 or 4GB flash chips at a reasonable cost. So you already understood my idea: a Pi Zero with embedded 2GB or 4GB flash, maybe (why not?) with Raspian Lite pre-loaded.
You could save money by removing the SD card connector (and, for me and probably for all people that makes small things with small memory, you could remove also the HDMA connector and the camera connector; by the way a "super-lite" distribution that would take <1GB or <512MB could be another idea - one of my first software stuff worked on a Z80 with 128KB and that was even too much memory at time! I suspect that there is a lot of wasted space within a OS that takes MBs or GBs...)
Greetings and keep up the good work!
Aldo