motorollin:
"I wonder why they evolved a larval phase rather than just laying bigger eggs with tiny, fully-formed butterflies inside"
Well the eggs are always going to be considerably smaller than the adult organism which implies the embryonic form would be smaller still. Producing a large enough egg would limit the number that can be produced due to the biological resources needed to produce them.
Even if they could lay a larger egg its also very unlikely that the resultant tiny infant insect would have a high probability of survival anyway. This is because it is unlikely that the principal benefit of their adult form - that is the ability to fly - is going to be effective when they would be perhaps a millimetre in size.
So you get a lot of effort in producing something with poor survival chances. Producing larger numbers of what amount to plant eating machines that can grow to a considerable size very quickly and then use the stored chemical energy to transform into the adult seems a better strategy for survival. Its obviously a strategy that works since all insects seem to use it. I cant think of any examples that follow your reptile-like pattern of producing perfectly formed minature offspring.
