I guess we are talking about different apps. Yours is Finder and mine is Safari. The design of Big Sur Finder makes much more sense where your claim of saving space by "blending the windowframe with the toolbar" is true. In Catalina Finder, there is indeed waste of space as you pointed out.
However in Catalina Safari there is no such waste of space: the tools are already almost aligned to the top of the window. As a result the space is wasted in Big Sur Safari compared to Catalina Safari, which is kind of opposite to what happens to Finder app.
I made a larger comparison and hopefully it now makes sense for you after inspecting all the four designs: Catalina Safari and Finder + Big Sur Safari and Finder.
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