We know, it's a bit confusing. Here's the direct quote from Cook:
So, apparently, it's just that extra .9" that makes all of the difference between a "compromised product" and a "fantastic product". Cook also went on to call the Microsoft Surface a "compromised product". We can't say that we agree as far as the 7" tablets are concerned, but it certainly fits well into Apple's marketing campaign. And really, that's all this is. Tim Cook and Apple don't want to make Steve Jobs sound like a liar, and the company wants to sell iPads. If Apple can take a jab at the competition in the process, it will obviously do just that. It's not like Samsung pulls its punches against Apple.
While the claims of the size difference are debatable, Tim Cook does go on to make a good point that because the iPad mini has the same resolution as the iPad 2 (which is another point of contention for those who don't particularly like Apple), the tablet can use all of the hundreds of thousands of iPad apps without any troubles. This is definitely a good thing, especially because it doesn't leave the onus on developers to update apps again after having to update for the iPhone 5.
source: The Verge