Double Control Arm Knuckle Height.
 

350Z Control arm and knuckle assembly.
http://static.ddmcdn.com/gif/nissan-350z-design-05.jpg

FD3S Control arm and knuckle assembly.
http://www.fd3s.net/suspension_front.jpg

I've heard a lot how having double control arm is very advantageous because camber is progressive as the wheel moves up the wheel well and maintains good contact area.

However, I am really confused about why having both upper and lower control arm closer together (like the FD3S) is more advantageous than say a 350Z's where they are much further apart because of a larger knuckle.

I've heard it's got to do with the geometry of the control arms when they are loaded....but I am not too familiar with that stuff.

To put it simply, if all else is the same then having the points closer will result in a higher camber gain per degree/inch of chassis movement. However, you also have to look at the inboard pickup points. If the 350Z has a larger height between the inboard pickup points as well then they will be closer to scribing the same circle than it initially looks by checking on the upright.

There's really no way to say which is better since one variable in suspension design on it's own is basically meaningless. How much camber gain you actually need is 100% dependent on the tires.

Manufacturers just use the Honda style long knuckle double wishbone suspension (like 350z) to make more room in the engine bay.

The downsides are less room for your tire inboard if you want to go wider and a more flex prone knuckle.

Takes as little space as a strut though with much better geometry.