Its a polemic really. The terseness and immediacy of Chekhov's stories and plays made them 'modern' and set them in contrast to older art. It was a very powerful shtick at the time.
Of course today's times are very different. Our lives have so much content and immediacy now that is beyond Chekov's experience that people seek out exactly the opposite.
Still I think the way he carefully and deliberately constructed things has a lot to teach us. In the software world he'd be a builder of lean core libraries and a hater of the bloatware apps that use them.
Wikipedia cites it as a "dramatic principle", not merely a style. I've seen it advocated as "the way things should be done". That's why I think the contrast is important to note: it's not a principal of good writing, it's merely one style of telling a story.
In art there are no absolutes like in management you can always find good examples proving the principles wrong.
The principle is more a guideline for new writers not to ramble and maintain focus especially if there are word limit restrictions typical to published short stories of the era, you cannot afford to waste words on things that don't matter to the story.
Established authors like Hemmingway or Asimov can get published with shaggy dog stories most regular authors cannot.
Even those authors can get a way once in a while, however most of the time they too have to follow the principle like everyone else too.
IRL is probably more like the shaggy dog.