I've heard of that feature before somewhere else. It gave the company that invented it unparalleled code density in their 32 bit systems and propelled them to the heights of success in mobile devices. What was their name? Wait .. oh, yes ... ARM.
Why they forgot this in their 64 bit ISA is a mystery. The best theory I can come up with is that they thought the industry had shaken out and amd64 was the only competition they were going to have, ever. Aarch64 does indeed have very good code density for a fixed-length 32 bit opcode ISA, and comes very close to matching amd64. They may have thought that was going to be good enough.
Note: the RISC-V "C" extension is technically optional, but the only CPU cores I know of that don't implement it are academic toys, student projects, and tiny cores for use in FPGAs where they are running programs with only a few hundred instructions in them. Once you get over even maybe 1 KB of code it's cheaper in resources to implement "C" than to provide more program storage.