What are the “2 all-day events”?

Tap on it to find out (if this wasn’t an image). I assume there’s a fixed one row of space for an all-day event there. That’s definitely on purpose, considering they even have a toggle switch to completely hide all-day events. Sure, it could be two or up to two elements but that comes at the cost of the detail on the timeline below. They probably considered the timeline to be more important because that changes more often as opposed to the all-day events that only change once per day, and that as a consequence you’re going to check the all-day events once per day (or even just the day before), so you can just tap the widget if you want to see them.

It would be great if it was more customizable in terms of the layout of course, but this is Apple we’re talking about. I’m honestly surprised there’s a toggle switch to completely hide all-day events in the first place.

Why is HALF of the widget wasted white space.

This one’s a timeline, not a list of events unlike the one in your post, and in that time (8-12 today) there are no events, so it’s blank. It’s as much wasted white space as the full calendar view with no events in it.

Personally I have no problem with the calendar widget, but I have to say collapsing today’s all-day events in the list view as in the OP if there’s space left is questionable at best.