You did. You explicitly asserted the following.
> If a business has the budget for 1 or 2 engineers though, they might be able to task them with work that previously required 5-10 engineers (...).
In your own words, a project that would take 5-10 engineers is now feasible to be tackled with 1 or 2. Your own words.
> (...) The point is that making software development easier can actually increase the demand of software engineers in some cases (...)
I think that's somewhere between unrealistic and wishful thinking. Even in your problem statement, "making software development easier" lowers demand. Even if you argue that some positions might open where none existed before, the truth of the matter is that at the core of your scenario lies a drop in demand for software engineers. Shops who currently employ engineers won't need to retain as many to maintain their current level of productivity.