Why does the E39 BMW 5-Series only have 2 tiny & fragile cup holders inside it below it’s A/C control?

Because the BMW is a drivers car not a mobile food station for fat Americans.

BMW's have notoriously inadequate cup holders. My 1988 e28 had none at all.

well seeing the youngest e39 is 17 years old who cares ?  mine is 22 years old ..never once have i used them in that time 

They tried hanging them on the outside, but at high speeds there was spillage.

Because it was designed for driving at high speeds on the Autobahn.

Germans don't drink or eat when they drive - it could lead to a "distracted driving" citation.

The pop-out cup holders were an afterthought mostly to appease American drivers.

Incidentally - those cupholders have won design awards.