Saying that "jumbo shrimp" is an oxymoron is only a linguistic conceit. In the 1890s, a representative of the Chinese Emperor visited the United States. Much ado was made of his visit, and all things Chinese became popular (despite racist policies such as the Chinese Exclusion Act). Most Chinese in the United States were clustered on the West Coast, but there was an enclave in New York, and one of the Chinese restauranteurs there was hired to produce a "Chinese" dinner for the Ambassador when he arrived in Washington. Chinese food became all the rage. Chinese men had spread throughout the country to a limited extent as a result of the employment of Chinese in the construction of the Transcontinental Railroad. Those working from west to east had employed a great many Chinese men, and went to great expense to provide them the types of food they preferred. After the completion of the railroad, many Chinese men migrated to communities along the length of the railroad. When Chinese food became a popular new fad, those Chinese who had cooked for the railroad workers, and many others, found a new, lucrative source of income in opening restaurants around the country.
For many Americans, their first exposure to shrimp was in Chinese cooking. The cooking of "stir fry" foods meant that the very small shrimp, known commercially as "40-60" (meaning 40 to 60 shrimp make up one pound), were most often used in Chinese restaurants. From this, the word shrimp came to be a synonym for very small in American usage, and thereafter spread throughout the English-speaking world. Further confusing the issue is the habit of cooks from east Asia of referring to the largest shrimp--jumbo shrimp or tiger shrimp--as prawns, which is, in fact, a different creature altogether.
Very small shrimp are also often referred to as "popcorn shrimp," because one cooked shrimp is no larger than a large kernel of popcorn.
Wikipedia wrote:Popcorn shrimp also refers to bite-sized pieces of fried shrimp which may be eaten in a manner similar to popcorn.
The tiger shrimp, or "jumbo shrimp," is considerably larger, and is commercially referred to as "8-10," meaning that eight to ten of them, with the head removed, make up one pound. These are also often referred to as "prawns" by east Asian cooks.
The true prawn is quite a different creature from the shrimp. I've eaten many a tasty prawn in Ireland, where the two most commonly touted crustaceans are the Galway Bay prawn and the Dublin Bay prawn. When Italian cooks prepare scampi, they often are using the locally harvested prawn, although the term is also often applied to shrimp. The term shrimp scampi which is often described as a redundant term is not in fact redudant, since the dish scampi is usually prepared from prawns, and calling it shrimp scampi simply informs the gourmand that he or she will be eating shrimp rather than prawns.
Jumbo shrimp is not necessarily an oxymoron.