"Knuth's finding was that the dispersion of indexes for a sequence of consecutive keys is maximized when M is chosen this way, thus a multiplicative hash table with a dense set of keys will have the fewest possible collisions when M approx= 2^N * R."
Although, if the keys are dense, then we could just use the low bits directly. I guess the unstated assumption is that in the real world, we'll have a mix of keys that are sequential and keys that are strided in such a way that using low bits directly would cause a lot of collisions. So we need a multiplicative hash to take care of the latter and we should use 2^n/phi to take care of the former.
Austin, you've done a lot of great work on this. What is the hash function you'd use today for small (<=32byte) keys?