It does... but I think the OP is looking at it from the wrong perspective. A 29" diameter tire with a 5" headtube will have the same range of handlebar height as a 26" tire with an 8" head tube, all other things being equal. The top tube will be the same height regardless of if you push the bars higher with the headtube or the wheel. THe standover height is the same because a bike with larger wheels will likely have more bottom-bracket drop from the rear axle to the BB.
Toe overlap is the real advantage of a smaller wheel, especially if you are getting a bike made with a short top tube.