On traditional “bottom-up” automotive engine coolant systems, the lower hose runs to the water pump’s suction side. As on any fluid system, suction results in negative pressure, aka vacuum. The higher the suction force, the higher the vacuum and the lower a liquid’s boiling point. If the fluid begins boiling (changing state from a liquid to a vapor), air bubbles form, which can lead to water-pump cavitation and loss of cooling efficiency. Essentially, the water pump goes into “vapor lock” and no longer circulates coolant through the engine. The air bubbles in the pump can even recompress, causing a small explosion that can damage the pump’s impeller vanes.

The smaller an orifice’s cross-sectional area for a given flow volume, the higher the vacuum—so the lower hose is typically made larger than the top hose to minimize suction/vacuum at the pump inlet, as well as to allow sufficient fluid volume to reach the pump so it can produce proper pressure on its outlet side.

Don’t second-guess factory hose sizes!

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Very true! As a Process engineer, that's what we were taught about Pumps. Cavitation is a very bad phenomenon, that's why pumps are primed, to remove the air bubbles.