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I don't think it was an older client version because I also got the chat interface update. I just know I was able to see more than one line at a time.
Your resolution on the desktop effects that.
Your browser Steam has the zoom out feature may help.
Is this on a mobile device?
Look in Big Picture>click the gear>display> resolution.
I think someone forgot how to program as this has been a feature of most chat systems for decades.
https://steamcommunity.com/groups/SteamClientBeta#announcements/detail/1595885640815440673
And it works a bit odd. It expands upwards...? 8 lines of text.