1) gameplay decisions - open spaced worlds need mostly 4 or 8 directions to move, while sidescrolling games mostly use in 3 directions + gravity (and falling mostly means death). This further means you can leave away one direction and the screen still leaves enough visible space for the 3 other directions. So a bigger char doesn't limit your sight that much.
2)screensize limitations - if you have handhelds or old systems the resolution was limited (it's still limited, though for pixel art HD is "practically" infinite). Since you have just a given size of pixels to work with, you have to make the most out what you have.
3)artstyle decisions - drawing a sidescroller sprite detailled is quite simple. You have to draw it 1 time and you can mirror it - works perfectly. Some games with asymmetric characters use 2 directions (Metroid) but even there it's just editing.
Topdown games need 4 direction, while only 1 can get mirrored. Means they are by definition 3 times more work with the same artstyle. You can do them 8 times too.
4) hardware limitations: topdown needs more sprites, realistic styles need usually more frames, this together needs more memory and on mobile handhelds and early gaming systems memory was quite an important factor.
3 Frame animations with pokemon char styled sprites are looking alright. A Lara Croft sprite with 3 frames would look quite stiff and in terms of animations cheap.
regarding the second part of your question:
"I've only seen them tall in an open spaced/iso game on pc, why?"
Most bigger sprites you have seen on pc are most probably pre-rendered sprites and not pixel art sprites. This means you build 1 model, animate it 1 time and just let it display in a lot of directions. You take those directions and export them as images (sprites) - Diablo is the most prominent example for this technique. This doesn't look as sharp as pixel art though and also won't get remotely close to any great 2D handdrawn and in the right way exaggerated animation, just from the feeling, but nevertheless it's much simpler to do it that way.