Cerny specifically mentioned SSDs would require speeds > 5.5GB/s due to the internal SSD having 6 levels of priority compared to that of 2 levels with NVMe. That's where the talk of 7GB/s came from. Nothing to do with compression.
Yeah, but him being a technical guy with a history of under-promising and over delivering, he was likely - in all fairness - giving the worst case scenario.
The over provisioning for the ( PS5) OS as happens early in all gens - with ram and CPU reservation, and now 100GB storage it steals - provides a mechanism by which bandwidth and latency hiding can be invisibly achieved for the nvme expansion drives that are slower than the raw speed of the internal drive.
At the time of reveal, they probably hoped that faster/bigger nvme drives at lower costs would have followed a similar trend as before - in the PS3 gen when they started with 60gb HDD or less - which isn't happening now. leading them to remove any requirement for a working internal drive in the PS5 to help out, and being able to lower the OS provision heavily by the end of the generation.
The pandemic disrupting everything with rising costs - and slowing faster drive releasing sooner - probably meant that they are more worried about losing digital sales from PSN because of everyone's storage fully rammed - because of games like CoD - and have opted for a more complicated, less ideal solution needing a working internal nvme cache + external SSDs, to let users properly expand their storage for PS5 games now, with what is available/affordable.