That time when they added spacing in the volume settings, I too didn't like it and changed it in my resource pack. But now as they have done it to the main buttons, I have realised the difference it makes

I have had problems with the UI where it would click when I was trying to scroll. I have to decide for a sec where to click every time to scroll. The space between the buttons have significantly reduced that time for me.

Cannot play with it now but I'ld suggest to add a middle option, instead of on/off, the waypoints only show players if you can see their name tags on your screen. No up/down arrows, no huge range. Then what's the point of waypoints. I find it harder to locate/follow nametags (especially far ones)

Great! Now make it automatic based on system dark mode. But still keep the toggle just in case.