Very nice to find these cool moments, the decision to make the arena smaller was a random thought that appeared when I said "I don't wanna have lives or a health bar, how can I make an alternate failure mode?". It felt really intense (so, fun!) when I started testing so I knew it would stick.
The spawning was another fortunate accident actually, I did that so the enemies wouldn't all shoot in sync when a wave started (the sound was very off). It ended up giving the player more time to react to what was coming and makes for a really nice "wave spawn" animation.
All in all, it was playtesting a bunch that helped me find the fun, just like Mark recommends.