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.