Let's keep in mind that these terminals were really meant for pole use, whether attached to the pole vertically with a bracket or to the cable's support strand using the lashing eyes on the right side of the OP's photo. In these applications, typical drop wires were simple one-pair 18.5 AWG copper coated steel drop wire. The slack didn't reside inside the enclosure, rather it was coiled in a loop beneath the terminal and routed through rings. The drop wire entered through the vinyl grommets and terminated directly on the binding posts with no internal slack. Note that there is a grommet in line with each pair of binding posts.

These made it into use as building entrance terminals probably due to the fact that they were so popular elsewhere in pole installations. Kind of a "one size fits all" scenario. My guess is that they were a cheap and easy mid-range terminal and the lack of space was just something that they learned to live with.

Ed Vaughn, MBSWWYPBX