My question was inspired by this one. The majority of public restrooms have huge sinks and short faucets. When I wash my hands, most of the time I touch the back wall of the sink and that makes me wonder, what is all that empty space in the sink used for if the faucet only reaches in to about the fifth of the sink's diameter. Why can't sinks be smaller or faucets go out to the middle of the sink?
In addition to the material cost that Chad mentioned, they are more durable. Public restrooms are likely to experience much wear-and-tear from abusive patrons, especially in certain settings. They must be built to last.
If you have a longer faucet, you can exert greater force on the base of the faucet with less effort on the end. Simply put, longer faucets are easier to break.
My speculation would be that it also helps to save water (same as the tricks used to make people push controls for the water to flow every 5 seconds) If you have the faucet in a more convenient distance to yourself, you'll probably just keep the water running even when not directly using it, if it's less convenient to reach - you may be encouraged to run the water less times.
Interesting to consider as well (my observations):
if you live in a Scandinavian country (e.g. Holland) you'll notice that in many cases the whole sink/faucet station is so high that a normal/non Scandinavian person, especially a girl, can not really use it properly. Do we really need this kind of height adjustments based on the statistical height of the population?
in South East Asia in smaller bathrooms sometimes you notice that the sink and a shelf above it are almost the same size, protruding from the wall with same distance which makes it impossible to for example wash your face (the shelf will prevent you from keeping your head over the sink) - bad design or built with some purpose?
Just some more bathroom stuff :)