Yes, I agree the sub-buckets are there to make the price-jumps smaller. Instead of having I avilability for 100€ and the next bucket is J for 520€, they created a set of I-prices like I[1] 100€, I[2] 200€, ..., I[5] 500€, ..
in order to be able to adjust price in smaller steps. Instead of zeroing out I and go to offer J, they can zero out I[1-4] and offer I[5].

However, there is nothing in this system stating that I-prices are always lower than J prices. In fact, the point of the sub-buckets isnot to make it cheaper for customer, it is to add a gliding scale of prices, that are not limited upwards, to extract the highest possible price at all times and all situations.

For my example, the ticket bought in I[1] for 100€ can still technically have I avilability when you want to change it, but it has zeroed out everything below I[13] e.g. which is priced at 1300€, while they at the same time can offer J at 520€.
So these sub-buckets can be used to manipulate the price in some creative ways for the person wanting to use the "flexibility" while at the same time offer competitive prices for a customer who has not yet bought a AY ticket.
Of course, like you said, cancel and rebook is an option when on flex ticket when there is an arbitrage to be made, but in reality it can be hampered for example when you only want to change the return and the departure is sold out or just days away and very expensive.

I wanted to do a real life example of this, I do have some flex bookings I could test prices for change-of-date, but they are waitlisted and thus I cannot access the booking anymore. But I have in the past had tickets where cancellation and rebooking was cheaper than changin date of one leg. That is how I end up with the view that these "flex" fares are close to a con job.