We have tried to reduce the space with the following CSS, but unfortunately there is a dead area in the lower folder view (possibly because of style="transform: translateY(...);" in <div class="md-virtual-repeat-offsetter">):

md-list-item.sg-mailbox-list-item .md-list-item-inner::before, md-list-item.sg-mailbox-list-item::before,
md-list-item.sg-mailbox-list-item, md-list-item.sg-mailbox-list-item .md-list-item-inner {
    min-height: 35px !important;
}
@media (min-width: 960px) {
    md-list-item.sg-mailbox-list-item .sg-item-name {
        line-height: 35px !important;
    }
}