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Vertical space is valuable now because there is less room to work with. As hardware manufacturers push shorter screens, software will work harder to reclaim that height.

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Well, if this is that much valuable, the hardware manufacturers wouldn't push shorter screens... And the Windows taskbar wouldn't take that much space! :D

I really must be missing something on what people want and do with their computers...

Manufacturers make them shorter because they are sold on the size of the diagonal. A 4:3 screen with a 24" diagonal is 14.4"x19.2" = 276.5 square inches. A 16:9 screen with the same diagonal is only 11.7"x20.8" = 243.4 square inches. Even if the retail price changes proportionately to the area, manufacturers come out ahead because each manufacturing defect only affects a 240 sq. in. product instead of a 280 sq. in. product. Smaller screens mean less waste, which means cheaper (more popular) product and higher margins.

Consider tablets and desktops versus notebooks and smartphones. Biggest impact is on notebooks whose vertical real estate is at a premium. Second are smartphone because of their form factor. As far as tablets and desktops: You can rotate your tablet and you can use a big monitor (or rotate that too if supported).

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