This is striking. If true, why not try to ignore whitespace and puctuation?
In old Latin, scripto continua [1] was a way to write continuously, for the exact same reason: to save space. Other modern languages still do that, and are no less parseable.
Granted, it's unlikely a commercial LLM would become popular if it produced output without spaces or punctuation; but an open source one that promised to be much more compressible, and therefore work on smaller machines, might be super useful.
It's not hard for a human to add spaces afterwards. It used to be a job for beginning journalists at the time of telex machines: press releases were sent in all caps without spaces, and interns were tasked with adding slashes between words. In French it was called "bâtonner les dépêches" (literally: add sticks to press releases -- not sure about the idiomatic English translation).