It's seems to me that any advantages of a tight-fitting lock would be outweighed by its lack of versatility. Bike racks or other locking points vary tremendously, and a larger lock is much more adaptable to differing situations. What good is a tight-fitting lock if it is too small to secure your bike to a rack? The racks at my office are designed in such a way that I need a fairly long U-lock to fit around the rack, my bike frame and the rear wheel. I wind a 4-foot cable through the front wheel to further secure it. None of that would be possible with the lock pictured in the original post.