> I think Knuth was referring specifically...
We don't have to speculate, the paper is online[1] and he is very explicit about what he meant.
The paper is, in fact, an ode to optimisation and the necessity of optimisation, including, very specifically, micro-optimisation. The "root of all evil..." part is a "yes, but". You actually have to leave out much of the actual sentence in order to strip it of its meaning:
"We should forget about small efficiencies, say about 97% of the time, premature optimization is the root of all evil."
If that wasn't clear, the very next sentence is as follows:
"Yet we should not pass up our opportunities in that critical 3%"
A little later in the paper:
"The conventional wisdom [..] calls for ignoring efficiency in the small; but I believe this is simply an overreaction [..] In established engineering disciplines a 12% improvement, easily obtained, is never considered marginal; and I believe the same viewpoint should prevail in software engineering."
[1] https://www.cs.sjsu.edu/~mak/CS185C/KnuthStructuredProgrammi...