How propagation delay depends on the block size?
The y axis of the plot shows the delay/size, that is, the number of seconds of delay produced by each kilobyte of data of the block. 

Therefore, as blocks get bigger, the overall delay of the block also gets bigger. However, the delay per kilobyte of data approaches a constant value. This is produced because the overhead generated by the bitcoin protocol when sending blocks (anounce the block via an inv message, send getdata to retrieve content, etc.) is less significant as the block gets bigger.