In the Windows Command Prompt, why is there a large amount of empty space below the prompt?

The "large amount of empty space" is the rows of the screen buffer that have not yet been filled with output.

To change the screen buffer from the default of 300 lines, perform the following steps:

1. Open command prompt.
2. Right click the application icon (in the upper left corner)
3. Click on Properties
4. Select the Layout tab
5. Set the Screen Buffer Size, Height to 20.
6. Click OK

Note: I recommend reverting the buffer size as 20 lines isn't many lines of displayed output.

I know this is not the why, that has been covered by @steven. If you want to change the screen buffer from within a command prompt or batch file you can make use of the mode command (mode columns, lines). I regularly use this from within the command prompt:

mode 200, 300