The iPhone has a screen that takes up most of its face. By aligning the camera and screen, they allow you to use the full screen. Can you imagine how annoying it would be to only be able to use ~30% of your screen to shoot video?
Sure, it means the video doesn't align with most computer monitors. But a ton of phone-generated content is being consumed on other phones in its native vertical layout (e.g. on Snapchat). And sometimes vertical layout fits the subject better anyway; we're just not used to seeing it for video because video formats have been stuck at 4:3 or 16:9 for the entire history of consumer video. Photographers have used portrait aspect ratios for over a century.