Perhaps it's because the grid style form ignores the importance of whitespace in clear and understandable design. Here's a good test: hold the form upside down and see if you can still tell it's structure at a glance, or hold it at the other side of the room and try the same thing.
Old terminals were fairly space-constrained so I can understand why this choice was made, but modern computers with their high-res screens do not have this restriction, e.g the iPhone has a full keyboard instead of a number pad with letters on, like feature phones had, because they had the space to do so.
Whenever I'm designing a system that is replacing paper, though it's been a long while. I find it best to start with as close to the paper version as practical. There's a lot to be said for making something that is familiar.
Rendering demo: http://insin.github.io/newforms-gridforms/
DSL example: https://github.com/insin/newforms-gridforms#usage
Seems like a bad idea to me whenever designs attempt to "Fit stuff above the fold". Scrolling is a lot better, and I think it's better to present users with a portion of the information at a time and allow them to progress through a long form in a linear fashion. Vertical scrolling > horizontal progression.