Let's say you want to build a big rocket (or airplane). You're going to need a lot of thrust. You can get a lot of thrust from a bunch of small engines or just a few big ones. Now, we know that more engines are more expensive than fewer engines, right?
But wait! How many rockets are we going to build? Probably not a lot. Of the heavy lift rockets, there have only been 13 Saturn Vs, 5 Shuttles, 2 Energias, and probably will only ever be 10 SLS(es?). Let's consider Starship--it's going to be reusable, so even though Musk wants a crazy launch rate, there's probably not ever going to be more than 15-30 built.
So what if we put only a few massive engines on each of our vehicles? There's probably going to ever be 50 (at most!) built. While that's not quite low enough that basically every engine will be hand-crafted, it's going to be pretty close. Building the tooling to make a rocket engine will always be very expensive, and with only 50 engines to divide that cost over, each engine is going to be wildly pricey.
Let's compare this to aircraft engines. The PW4000 and the GE90, two of the most common engines you'll find in a Boeing 777, have each had over 2,500 manufactured--and recall, this is on a century's worth of incremental work into jet engine manufacture by P&W and GE. Much of their tooling is probably shared with previous engines. These are far, far cheaper a peace than the 50 engines you're planning on building.
So when building a rocket, a market in which volume is very low and development costs are very high, it's actually more expensive to use fewer engines, because so few of them will ever be built. It makes more sense to develop a smaller engine--something which (we haven't mentioned this yet) is MUCH easier to design & validate than a very large engine--and just make a bunch of them.
Note: we haven't even mentioned the redundancy issues yet--if one of 20 engines dies, it's not that big a deal. If one of 4 engines die, you're not going to space today.
Afterthoughts: if we ever get to the point where there's 100s or 1000s of rockets being built a year, and engine design has matured to be very reliable, I expect you'll start to see only a few engines per rocket. But we're building 10s (at ABSOLUTE best!) of rockets per year.