The problem is why HTC didn't just put capacitive buttons on the logo bezel and use the logo as the home button. What a waste of space on screen and off!!!
I too also like my phones to be more compact. Compared to the Nexus 5, the new One is just too big now. I like my thumb to be able to reach the top opposite corner on the screen. The new One is just too large for me. And, yes, I've used it. I'm waiting on what the new One Mini have in store for me.
All that said, the audio ability of this phone almost makes me forget about all the annoyances.
I know what you mean on the seeming waste. I'm guessing that HTC was reacting to criticisms that its capacitive buttons were harder to understand (I have to double-tap to do what now?). Since I use a Nexus 5 these days, losing a bit of screen real estate isn't as big a deal to me as it might be to others.