Inertia does not help on the highway, unless you're trying to pulse and glide in a manual vehicle, and being able to lengthen your pulse and glide cycle makes you more likely to actually do it.
I can't say exactly why larger wheels hurt on the highway, but I have a few ideas:
-Wheel surface is generally less aerodynamic than tire surface
-Larger wheels are heavier
-Tires on upper trim vehicles may prioritize grip or noise, rather than economy
-Tires on larger wheels may be wider
It doesn't relate to your question exactly, but a larger tire diameter, all else equal, should reduce rolling resistance, because the deflection is lower. A larger diameter tire can be narrower and achieve the same contact patch, which further helps with aero. All else equal it should be heavier, however, and lift the vehicle firther from the ground.
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