If you lower a bike an inch..say for a smaller lighter rider..you can't then increase the spring rate for a rider LIGHTER than the standard?? You can however increase dampining to resist bottoming..correctly thru compression..but cheaply thru rebound..making for a jolting ride..

Regardless of top out of shock, a lowered bike starts lower to the ground..and gets lower yet when the rider is seated..just like any other bike..

Assuming standard rider sag of 33% (about normal...+/- since we are talking non-linkage bikes..) If you start with a one inch lower suspension..off of, say a GS with 7" of travel minus the inch..minus a third of that (approx 2" of rider sag) you are leaving yourself 4" of compression..

If they shorten only the top out as stated..how does the bike get closer to the ground for a shorter rider?

PS..the rider sag or free sag numbers are what makes it amazing to me that people can get along with ESA..if you don't weigh 185 lbs..the preload settings are a guess at best. How do they know what your pillion weighs? Your load of gear? With out proper preload (Rider Sag) all bets are off..

In answer to the OP's question..you lose an equal amount of ground clearance and a proportional amount of cornering clearance..simple geometry..

In my opinion (yeah I know.I'm new here..Find me on ADV Rider..) you should only do this thru a Custom shock manufacturer..so that compression valving can be matched to keep away from from stiff rebound damping trying to prevent bottoming..