The steel belting in the tire doesn't allow the tire to grow in diameter any amount that would be noticeable.
The reduction in rolling resistance is from reducing the flex in the tire's sidewall. The reduction in sidewall flexing also leads to quicker steering response.
This is also why underinflated tires are dangerous, they flex too much, heat up and eventually fail.
For my daily drivers, I run my tires at or above max sidewall pressure for better mileage. If I were looking for the best handling, I'd probably run somewhere between the door jam pressure and that. The door jam pressure is the OEM's recommendation, and is a compromise between handling performance and giving you a smooth ride (since the flexing does absorb bumps).