Just to clarify, what many Firefox castaways (myself) are looking for when we asked for a compact tabs option:
Conventional UI yet looking for more vertical space - that is, separate tab bar and address bar (two row) - but reduced pixel height for address bar and tab bar. The user benefits apart from increased real estate in 13" screens, there is space for extensions in the address bar, and the tab bar can fit in more tabs without scrolling or reducing in width.
Currently, with the present compact option in Orion, just shaving off a few vertical pixels in tab bar height will probably satisfy these set of users.
( Separate issue: with the Version 0.99.109-beta, it seems Orion always shows the tab bar even when only one tab is open. Not sure, if this is a bug or intended change. The expected behaviour is when only single tab is open, the tab bar should not be present.)
There is another set of users who would prefer "Safari 15-style" compact mode - that is where the address bar and tab bar is clubbed together. They are not necessarily looking for vertical space saving(?), if I understand correctly.
I am not a fan of this UI since it compromises too much on tab area +extension icons, but would leave it to the UX experts and community to take a call.
Separate from this is the coloured tab option. Again, I am not a fan of this as I prefer my browser chrome and content to be separate. For immersive mode, I would look to go full screen or focus mode.