Let's try a simple situation:
\showboxdepth=1000 \showboxbreadth=1000
$
x{a\over b}x
{a\overwithdelims()b}x
\mathinner{a\over b}x
\showlists$
\bye
The output in the log file is
### math mode entered at line 2
\mathord
.\fam1 x
\mathord
.\fraction, thickness = default
.\\mathord
.\.\fam1 a
./\mathord
./.\fam1 b
\mathord
.\fam1 x
\mathord
.\fraction, thickness = default, left-delimiter "28300, right-delimiter "29301
.\\mathord
.\.\fam1 a
./\mathord
./.\fam1 b
\mathord
.\fam1 x
\mathinner
.\fraction, thickness = default
.\\mathord
.\.\fam1 a
./\mathord
./.\fam1 b
\mathord
.\fam1 x
### horizontal mode entered at line 2
\hbox(0.0+0.0)x20.0
spacefactor 1000
### vertical mode entered at line 0
prevdepth ignored
It's pretty much evident that a fraction is turned into a \mathord
atom unless it's in the argument of \mathinner
.
A simpler
$a\over b\showlists$
produces
### math mode entered at line 2
\mathord
.\fam1 b
this will be denominator of:
\fraction, thickness = default
\\mathord
\.\fam1 a
### horizontal mode entered at line 2
\hbox(0.0+0.0)x20.0
spacefactor 1000
### vertical mode entered at line 0
prevdepth ignored
It's true that the TeXbook explicitly tells that fractions are considered as Inner atoms; in tex.web
module 761 the case switch for the second pass over a math list has
fraction*noad* : begin *t* ← *inner*noad ; s ← fraction*noad*size ;
end
which should mean what's intended in the TeXbook. On the other hand, it's clear that the fractions are considered as Ord atoms.
This seems to be however the intended meaning. Here's an excerpt from texbook.tex
(corresponding to page 60); in the output no thin space is set before the fractions.
3510 just after a new magnification has taken effect. This adjusts the line width
3511 so that the material on each page will be $6{1\over2}$ inches wide when it
3512 is finally printed, regardless of the magnification factor.
3513 There will be an inch of margin at both left and right,
3514 assuming that the paper is $8{1\over2}$ inches wide.

\showlists
make apparent.mathinner
fractions will be treated with additional space.