On bikes, only if it's at the front! But I can't think of an e-bike with more than one gear at the front. So, we've all been talking about the gears at the back.
To get back to the original post.. "Why does the cycling world think moving up a gear is actually moving to a larger sprocket on the cassette (easier pedalling, lower gearing) when it really means moving to a smaller sprocket or taller gear?"
I suspect that it has its roots in the motoring world. The gears were numbered from 1 (the lowest) and the others were higher (2, 3,4...). So, moving up a gear meant going faster! No-one saw the gears inside the car's gearbox, so the size of the gears was never something that could cause confusion.
To transfer that analogy across to bikes, you have to go back to when we had three gears on the front. 1st gear was the slow one, middle was the 2nd gear, the fastest was the third one, so the analogy still worked. The fact that the teeth were getting smaller was irrelevant. Because you can see the gears it has become confusing. Now although we have simplified the gearing (1x for ex), the concept remains, but because you can see the gears, it still confuses.
But the concept of "moving up a gear" has stuck. I agree it is physically wrong, but that's language and history for you.
If the gear shifter was numbered 1-12 (as they used to be for lower numbers) and you couldn't see the actual gears, there would be no confusion.