Q: You can accomplish the same thing by clicking the Red X and dragging it to the top to limit the space?
A: Yes you can - but since the storage size is configurable, you can also make your chests larger.

Q: I thought the cargo would be also multiplied?
A: No, stack sizes remain the same.

Q: Why would I want to have smaller chests?
A: You find yourself limiting the inventory size of all your chests to very few stacks, but still use steel (or logistic) chests everywhere.