I am using a manually created /data partition as my personal space. Many dotfiles and 'dotdirectories' are distro+release specific. With having all my personal data in a separate partition makes switching distros (or using multiple ones) a breeze as I start with all my data intact and a virgin /home which I can populate with my dotfiles as I see fit.

My Documents was never meant to be a storage space for application settings. Application Data / AppData is the place for this. Of course, whether an application complies with this depends on the developer, and many applications break that rule

But My Documents is one level below your homedir.

Your homedir equivalent on windows (since Windws XP) is /Documents and Settings/username, or the modern shortened equivalent. That has subdirectories for documents and application settings. Apps that put config data in My Documents are using behaviour dating back to Windows 95.

It's the same on Mac OS - /Users/username has a Documents subdirectory. Mac spps tend to be better-behaved, but a few manage to pollute the Documents directory. On Linux you may roll your own or use a ~/Documents directory created by your desktop environment. The fact is your homedir is the home of pretty much anything that is user-specific, and you either need to collect all the config data into some sort of config directory, or do your own organising in a subdirectory, or both.

On Windows I've retreated to Desktop which remains fairly sane as long as I opt-out or remove shortcuts being created after an install.

"My Documents" is a nightmare... I think only one folder (out of nearly a dozen) and only one file are actually of my making.

Where would you choose to put application config instead?

Literally anywhere but my personal space. Why not have /etc/<username>/? I could even live with a single ~/.config/ but very few apps use that.

It's actually quite useful to have everything that belongs to a user under one directory.

The canonical example is the backup. There's a strong case to be made for "tar czf /tmp/backup.tgz ~". Do you really want your backups to become as complicated as they are on OSX and Windows?

Likewise, being able to mount home-directories from remote servers, and being able to easily delete/move/quota users are highly desirable features in multi-user systems.

Microsoft now encourages to use AppData/ which is much better.