There is much of note here, some good observations and some not so good.
The title of the thread is an excellent one. Nearly all golf architects and developers would dispute its premise, because both positions include the need to call attention to oneself, and cool golf holes are generally the way that is done in the modern golf industry. I have heard Mike Keiser stress the need for as many cool golf holes as possible; I have never heard him state a desire for a compact routing.
Indeed, the one thing that all modern award-winning courses have in common is that they are NOT compact; instead, they are all built at as big a scale as possible, with wide fairways, big views, and the "king of the world" sense that they use up a lot of land. I'm as guilty of that as anyone else ... Ballybunion, for example, is way more compact than Pacific Dunes [or Bandon Dunes, or anything else at Bandon]. However, my point is that the raters of the world have proven themselves totally incapable of understanding the point of this thread. I can't think of a compact course that has gotten any love from the raters in 20+ years. Efficiency HURTS a course in the rankings, sadly.
Now, compactness and walkability are not necessarily the same thing. I'm a big believer in walking, and I've built a bunch of courses where the greens and tees are pretty close together, yet there is a lot of land left over between holes. This is not efficient from a construction standpoint, though some people would argue it is better from an environmental standpoint. [It would be better to cram the holes together and leave 40 acres of nature on the outside, but if the 40 acres is on the inside it's less likely to be developed.]
I personally have a lot of admiration for efficient routings, the same way that computer geeks have an appreciation for efficient coding and use of memory. One reason places like Merion and Royal Worlington & Newmarket and Whitinsville and Inverness [before Fazio] rate so highly with me is because all the holes fit together so perfectly and there is zero wasted space. Of course, only some pieces of property allow this to work out with elegance, and there are many sites today where environmental areas and buffer zones make a compact routing impossible.
The poster child for the trade-off Peter is talking about is Mike Hurdzan's Bully Pulpit course in North Dakota. Most of the course is relatively flat and efficiently routed and a great walk, but the 14th-16th holes ascend a 100-foot hill in "badlands" terrain to play a signature par-3 across a chasm, and then a big elevated tee coming back down. This decision was made to put the course on the map, at the same time that it rendered the course unwalkable for all practical purposes. It is easy to see the logic at work, but I do not think it improved the course in the end. [But what do I know? Ron Whitten called the 15th "one of the greatest par-3's I've ever played." I thought this was a big stretch.]
Sean likes to bang on about the starting and finishing holes being right next to the clubhouse. I love this feature of UK courses. The reason you don't see it happen more in America is that the golf course is routed and built while the clubhouse is still being planned. So we are obliged to leave a lot of room around the clubhouse for the architect to sort out his building and parking and all, and then the clubhouse architect comes in and builds the clubhouse away from the course, because he's worried about being criticized for not leaving enough room around the building for traffic flow, staging carts, and assorted other b.s.
I've only built three courses out of 35 where the clubhouse was an existing building that I could depend on -- St. Emilion in France, where the building is awkwardly on a hillside near a road, and the two at Stonewall in Philadelphia -- and the two at Stonewall plus the new one at Tara Iti [where I worked very closely with the architect after giving him far less room for a clubhouse than normal] are the only ones where I really like the relationship between clubhouse and course, because I was able to visualize it and maintain control of it.
Sean, I've noted a fair amount of abuse from readers of my book for placing too much emphasis on the walkability of courses in my number ratings of them ... so I think you are right, most people [even the well-traveled ones] are minimizing the importance of walkability in their estimations of courses.