They don't "have" to.20 m is absolutely massive. Subtracting my couch and tv stand I have 5x7 feet available to stand/walk in my game room with is actually quite a bit bigger than in my condo which was about 3.5x4 feet.
Unless something changes, Vive will be compatible with all OR experiences. (Even "OR exclusives" should be modifiable to support Vive.)
That's also not really the purpose of the camera. I'd honestly be content with playing something with Skyrim, and standing up (without physically walking around) and being able to slice bad guys virtually.
Also what Tacos said is correct. It absolutely works. I'm still not sure how well it works, but far better than one would expect.
There's this gif of the real world walking vs. virtual world, and it is fairly impressive. The real world mostly stays in the middle circle, despite the virtual world being much much bigger.
The middle circle though is still gigantic, it's about 20m. It's much smaller than the virtual world, but still much much much bigger than anything we'll see indoors.
I do wonder if there is something that can be done to make it much smaller.