Higher end Smartphones have anyway always on displays. And the led needs screenspace - which should be maximized. That's why the notch on phones etc. was introduced.
I still think it's a terrible compromise. I actually looke specifically for a phone without one and ended up with a Sony Xperia. Sure, the front isn't 100% screen and I have tiny bars above and below the screen, but who cares?
This is true, and my last phone with a notification LED was like this, but I found that having the light recessed made it a lot harder to see from across the room since you're dependending quite a bit on viewing angle.
I have one of the Galaxy Notes that has both LED light and Always On, and you just made me realize I pay attention to the Always On display more than even noticing the LED light.