This country is no different than any other country in the world. You do customs and immigration at the point of entry to the country. Domestic flights do not require Customs or Immigration. When I fly in and out of the States I often to to stay at an airport hotel overnight or wait many hours for my connection. It just what happens anywhere.
Naturally you have to go through immigration and customs at the first point of entry into any country, but many airports have a convenient process for travelers that are still in-transit. You go through immigration and customs, then you wheel your bags to a designated area where they are taken and routed to your next flight. Then you move into the departure area without ever having to go through security again. They could/should create a similar process at GCM.
And when you fly back to GCM from the Cayman sister islands, under the old process, you are mixed in with the new arrivals when you land and routed toward immigration and customs again - even though you haven't left the country. If several planes land around the same time it can be very difficult to fight your way out of the pack to avoid going to Immigration, just to be told that you don't need to be there. Then get your bags, exit and re-enter the airport and go through security again to get to the departure lounge to leave the county. It is not a friendly or efficient procedure in either direction.
It is true that you don't need to go through I&C for domestic flights in most places, but it doesn't always work that way in Cayman! If you are traveling from GC to LC as the final destination, after already going through I&C and Security at GCM, if your flight is scheduled to stop on CB they may make you claim your bags and go through C&I and security all over again on Brac (a shorter and easier process than GCM but still redundant) before you can take the short flight over to LC.
I realize that international flights to and from GCM have the greatest traffic by far, but if they had the chance to fix the seriously broken process for interisland travel and didn't take advantage of the opportunity, that would be very disappointing IMO.