They tend to look better at small sizes because they were built pixel by pixel and tweaked to look good at specific sizes. You'll notice that when you increase the font's size beyond a certain point, the bar and its buttons will increase accordingly. You can, however, increase the title bar's size without increasing font size. I've found that when I'm working on a smaller monitor set at high resolution, increasing the title bar's size makes it more likely that I'll hit the right control button, rather than quitting when I only wanted to maximize the window. If you've already scrolled down the Items list, you'll notice that there's another choice called Inactive Title Bar.
Color is the only thing that can be set separately for the Active and Inactive title bars.
Active Window Border. The color of what you and I would call the border is mostly controlled with the 3D Objects setting. I'm not really sure why anyone would want a fat, two-colored window border, but the folks up in Redmond thought it a necessary option. You can often open multiple windows within a program, helpful for dragging and dropping text, for example, between two open documents. If your windows aren't maximized or fully tiled, then there's some background space.