Markdown is undoubtedly more readable, but HTML can be more readable than most people make it. And considering that the ultimate goal is to wind up with a layed-out, styled document, its capabilities in that regard are just plain-old more important, especially since markdown isn't going to replace WYSIWYG editors any time soon, and almost everybody who needs to know HTML can learn it relatively easily. Browsers collapse white space by default, so you've got a lot of flexibility with its formatting:
Page Title
Page Title
Lorem ipsum dolor sit amet, consectetur
adipiscing elit. Ut ac lorem ut massa
euismod vestibulum.
Nullam rutrum blandit eleifend. Aenean a
varius diam. Morbi sodales velit nunc, vel
vestibulum lorem tempus sodales.
--or--
Page Title
Page Title
Lorem ipsum dolor sit amet, consectetur
adipiscing elit. Ut ac lorem ut massa
euismod vestibulum.
Nullam rutrum blandit eleifend. Aenean a
varius diam. Morbi sodales velit nunc, vel
vestibulum lorem tempus sodales.
I get why many developers like this idea... Web developers are responsible for implementing the complex user-facing parts, and their primary weapon is text: doing extra work sucks, and when you're a hammer, everything looks like a nail. But developers are not designers, and design not being left to developers in mature organizations is no accident. Absolute, deliberate, limiting simplicity is always an attractive argument if you dismiss the value of, or maybe don't even understand the reason for the complexity. I won't deny the advantages of reader-view-level simplicity in web design: it's easier to visually parse, more performant, and easier to navigate compared to most web pages, similar to how books compare to magazines-- but about 225 million people per year in the US read magazines and I assure you most of them would not choose to have textural printouts in lieu of their current form. While people like having the option of a uniform, grey, easily visually parseable mode to view webpages, that's probably not what they want even
most of the time, let alone as a deliberate limitation.