twoside option produce a wider margin at the binding/spine edge, rather than the other way around?
I do not think there is anything illogical regarding the standard
LaTeX class page design. This page design does not include any allowances for binding offsets. The binding offsets are a function of the thickness of paper as well as the number of pages in a book and the method of binding. If you binding a book or report with a spiral binding machine, it will need a different set of page dimensions.
Page layout is buried in tradition and history and you can read more about it at the canons of page construction.
Besides Bringhurst which was quoted by Brent in his excellent answer Tschichold also devotes a large portion of his writings in the study of page layouts. As you can see from the image below he is also advocating large outer margins. Another commonly forgotten reason, besides what is thought as good typography, is that you do not want to have a line width greater than 1-1.7 alphabets (for readability), so the size of your paper and the size of your default font also has an effect. The Koma class goes as far as to design margins based on the font size. (European books also tend to favour smaller margins).
Now the exceptions. Modern trend is to have the margins almost equal, plus anything from 3-6mm binding offset and the reason is screen reading. Here is a copy from a book, I like the design with narrower margins (but then it does not use any margin material such as sidenotes). On the other extreme Tufte books and the Tufte-book class uses a wide margin, and brings the design into the margin as Bringhurst suggests. Similarly the
ltxdoc class uses wider outer margins to accommodate macro names in the margins.
Here is an actual "grid" based on Tschichold's principles,
As John Stuart Mill said "All good things which exist are the fruits of originality". Nobody stops you from experimenting.
There are two separate issues here: one is the layout of the text on the paper, the other is space left over for the binding.
For a long time, books (in the West; I'm not familiar with other regions) have been designed with a larger outer margin than inner. This is generally considered "prettier".
In the world of TeX, we are concerned with this sort of prettiness.
None of this stops you using the
memoir document class, the
geometry package, or any of the Komascript classes to define the page exactly as you want, as, I think, is reasonably clearly explained in the answer to the question already mentioned.
To paraphrase Yoda, "there is no rationalise, only do and be pretty".
To do justice to Ayman's comments, I thought a quote from Bringhurst might add to the debate. Talking about margins, he says:
... they must protect the textblock, leaving it easy for the reader to see and convenient to handle. (That is, they must leave room for the reader's thumbs.) ... [Bringhurst, R. (2004), The Elements of Typographic Style, version 3.2, Vancouver: Hartley & Marks, §8.5.1 (p.165)]
Bringhurst may well be the Yoda of typographical design, and I suspect my mentioning him here on TeX.SE may become a drinking game...
Light-hearted banter apart, if you haven't read this book, I can heartily recommend it.
Another book with some serious insights is Peter Wilson's "A Few Notes on Book Design" (perhaps the most self-effacing title I've come across!). My thanks to Lars Madsen for reminding me of this.
Another thought: people recognise the need for a place for the thumb, but want to cram lots into a page, so they make the inner margin narrow?
And here's another (short) piece that's just appeared on I Love Typography
There are some excellent answers already, let me add two simple observations:
Binding does not take space out of inner margin. Binding space is extra, is not a part of the page, and should not influence page design (besides determining, together with paper size, the page width). Binding space depends on binding method, paper size (which is often larger than page size) and other things that have nothing to do with typesetting. When opening a book, you do not see the binding space.
When you open a book, you see the two facing pages, which you can think about as columns of text. If the inner margin is exactly half of the outer margin, the space separating the two columns will be exactly the same as the space separating each of the columns from the edge of the page, which seems like a fairly desirable thing to do: