That's fascinating. I didn't realize dogs could be dwarfs. I wonder why it manifests so much in that population?
It's a problem in many breeds, including Havanese. And, of course, some breeds, like Bassett Hounds, Dandy Dinmont Terriers and Dachshunds were specifically bred for the trait. Responsible Hav breeders work very hard to remove it from their lines, but it still crops up from time to time.
As far as these street dogs are concerned, I'm not at all sure it's "that population". I think it may be a gene that is simply present in the species. We've seen dogs like this in Taiwan, Central and South America. (though far fewer in the western hemisphere)
I don't think you see it much in Dingo populations, but they need to hunt, so a dog with short legs would be at a severe disadvantage. Likewise, another sort of prototypical dog breed, the Basenji, actually has rather long legs. But although those dogs are not bred in the carefully controlled way our "breeds" are, they are used as tribal hunting dogs, that must go around the prey and drive it toward the hunters. So there has been human selection away from short legs.
If I had to guess, my guess would be that since Thailand and the far east are areas that have been fairly heavily populated for a very, VERY long time. I suspect that as dogs scavenging on the fringe of human society, there is simply not a big disadvantage to having short legs. Except for tribal populations, South and Central America are still "the new world"... populated heavily (with people AND dogs) FAR after the eastern hemisphere.
I'd be interested to see what the feral dog populations look like in other long-populated parts of the world, like the mid east. Unfortunately, aside from the conflict in those areas, there aren't a lot of aquatic plants, so it's unlikely that I will get a chance to see in person.