caption size

If you increase the font size of Caption text, the caption box will height adjust to adapt to the increased font size, but otherwise, there is no other hack that can bypass program logic and that default fixed caption size.

The caption box on MS Word 16.59 works the same way.

No, because Pages makes that caption box part of the image, and all Arrange panel adjustments affect the image only. The caption panel is not drag adjustable either.