How can low latency and high scalability be achieved with increased block size in BTC?
Block time and block size are two separate things. Both of them have their own effect on scalability (if you're considering transactions per second as the key factor of scalability)

If you zoom out a little and look at the scenarios from a 60-minute point of view, a larger block size (let's say we go from 1 MB to 2 MB) allows twice the number of transactions to go through in the same amount of time. The block time for both 1 MB and 2 MB blocks remains 10 minutes, but 2 MB blocks increase the network's transactions per second (or per block, if you want to count that way) to twice the previous amount.

If in this network you also halved the block time to 5 minutes, you've effectively quadrupled the throughput of the network.

Increasing block size is not meant to decrease the minimum time required for a tx to be recorded in the blockchain. It is meant to decrease the average time taken. Since bitcoin currently has full blocks, increasing the block size means that more transactions are confirmed in the same time, thus decreasing the average amount of time it takes for a tx to be confirmed.