OK, here's the scoop.....at least as best I can tell you. Why smaller than the listed size? Primarily is shrinkage during the drying process and second is due to surfacing. Wood shrinks across its width, but almost none along its length. However, wood is also a varying product. Some trees are fast-growing, some are not. Some are one species while others are another. There is also sapwood (the live part of the tree before it is cut) and heartwood) the dead inner wood that gives trees their backbone). Add in that there are also straight trees, bent trees, old-growth (not much around anymore), tree-farmed, and wild cut. Some trees have lots of limbs, which means lots of knots, and also changes the rate and amount of shrinkage. Add to this that wood used to be cut first by handsaw, then using large circular saws, and now mostly using bandsaws - kinda hard to keep an accurate size when multiple methods of cutting are involved.
Now, moving into more modern times, there have been added standards as to tree grading, as well as lumber dimension. When these standards were first brought into use, there were still quite a number of large circular mills still in use, and their cuts were oftentimes erratic, which meant lots of waste. So in order to prevent a backlash and shut down many sawmills overnight, the standards allowed for up to 1/4" to be taken from each side of the board. This 1/4" per side allowed for all variables even though the two most noticeable causes were shrinkage and surfacing.
So now, there are still new circular sawmills that are made and sold, and work quite well. However, the majority of the industry has switched over to bandmills, which can cut an exceptionally thinner kerf, and therefore can get more board feet per log.
As for the standards, I doubt they will ever be changed to anything else, whether thicker or thinner. This has been the industry standard for a very long time, and this one lawsuit is by no means going to be able to overturn those standards.
By the way, I had the opportunity to visit a GP (Georgia Pacific) mill in East Texas many years back. They were still using quite old surfacing machinery, but it was amazing how fast those boards could be run through! 8' boards were in and out in about 1/2 a second, being surfaced-4-sides. It was a truly spectacular and eye-opening visit.
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