Well don't forget to a large extent it's probably about economies of scale. Lead acid may be more economical when density/weight isn't as big a concern (such as in a home), but Tesla wants to produce cheap car batteries which can't be lead acid for the goals they set for their cars, and if they have a large extra market for the car batteries they produce, they can produce them cheaper, more efficiently, at larger scales.
If Tesla wasn't producing cars and somehow found itself wanting to build batteries for homes, still, it may not have gone lithium-ion.
Beyond that though there are still (some) issues with the amount of cycles/lifespan, charging speed, disposal and efficiency of lead acid, even if they're cheap and recyclable.
And even in houses, space is still a concern with lead acid being a few times more voluminous as lithium-ion, and it's not like the power wall is a tiny unit. Don't forget the standard version has a capacity of 7 kWh, while using a clothes washer and a clothes dryer just once uses up about 5 kwh+ according to Tesla itself. And the Tesla car batteries typically have 75 to 85 kwh of capacity or so, so you'd need 10 units fully charged to charge your car once. They've made it clear that you can buy and link multiple power walls, and I wouldn't be surprised if people ended up having more than 1 in their home. So space is definitely not completely irrelevant unless you're not in a very urban environment (which is a big use case for sure, but not always the case).
Two potential other things that Tesla might have up their sleeve:
Creating a product that gives car batteries a second life (and therefore a resale value when no longer suitable for use in cars). I don't think Tesla has officially commented on this but some of their competitors are explicit about this use case.
The battery in your car(s) acting like a powerwall when plugged in, so sharing software for demand management.
If Tesla wasn't producing cars and somehow found itself wanting to build batteries for homes, still, it may not have gone lithium-ion.
Beyond that though there are still (some) issues with the amount of cycles/lifespan, charging speed, disposal and efficiency of lead acid, even if they're cheap and recyclable.
And even in houses, space is still a concern with lead acid being a few times more voluminous as lithium-ion, and it's not like the power wall is a tiny unit. Don't forget the standard version has a capacity of 7 kWh, while using a clothes washer and a clothes dryer just once uses up about 5 kwh+ according to Tesla itself. And the Tesla car batteries typically have 75 to 85 kwh of capacity or so, so you'd need 10 units fully charged to charge your car once. They've made it clear that you can buy and link multiple power walls, and I wouldn't be surprised if people ended up having more than 1 in their home. So space is definitely not completely irrelevant unless you're not in a very urban environment (which is a big use case for sure, but not always the case).