Yes Krita allocates layer data in small tiles, which allows them to grow dynamically.
Rendering the canvas at dynamic size too could be a lot more tricky though. For example, I remember some commits fiddling with the guides and assistants which need repositioning when resizing the canvas.
And I guess a lot of other parts would need to change too to cope with dynamic canvas bounds, including the paint device classes that composite the layers to a final projection, so it’s probably a bit late to change the concept.