[hendzen]

Exactly, the relative weights are often proportional to the market cap. So if I invest $1M in the S&P that doesn't actually change the relative weights of the stocks in the index (mostly), since the impact on all of the underlying stock market caps should be roughly even as more money flows in to the stocks with higher market cap and smaller sums flow in to the stocks with lower market cap.

So in the case that say Meta's metaverse initiatives suddenly start taking off with the general population, it will take active investors to invest more in FB to increase FB's marketcap relative to the other stocks in the index so that passive investors are "correctly" allocating to stocks in proportion to their earnings potential.

Obviously there are some caveats here. Passive investors still have to choose an index to invest in, and inflows in to one narrow index (i.e. QQQ) will affect the weights of particular stocks in broader indexes. But the point stands that the relative marketcap ranking between stocks in the index is not affected much by in/outflows in to a particular index, and in some sense indexes are outsourcing their stock picking to active investors that actually try to accurately value individual stocks on an absolute and relative basis.