Some developers today think CSS-in-JS is a good idea. Web devs also wanted HTML to look and parse like XML. Backend devs also thought RPC with XML envelopes (SOAP) was the path forward.
Developers in all time periods have held curious ideas that appear ludicrous with hindsight.
As someone who always used uppercase for tags back in the day, it wasn't about saving space; it was to improve human readability. All caps tags stood out better against the backdrop of mostly lower case prose. Also the DOM APIs case-folded to upper when inspecting an HtmlElement object's name.
To be honest, this is the first I heard that folks thought it had space advantages.
Developers in all time periods have held curious ideas that appear ludicrous with hindsight.