Why don't colleges make terms shorter and with fewer classes? Instead of the typical 4 classes every 10 weeks, why not 2 classes every 5 weeks?

Condensed courses usually means:


Taking less courses at the same time which makes compartmentalization for memorization easier.
You (typically) take the same course every day, thus actively refreshing the neurons on that topic.
Taking the same course every day over a shorter time makes cumulative exams much less intimidating.
You see the same students everyday. This encourages a more natural stimulation of getting to know your classmates and seems to result in more collaboration outside of class.
If you're doing poorly in a class, for whatever reason, only the last 5 weeks of your academic life are wasted (as opposed to 10).


Overall, the same material is taught to students whether it's in 5 weeks or 10. The difference in that in the 5 week plan, students take half the classes they normally would per 5-week term, and the lecture for that class is everyday of the week.

An example being instead of taking intro to biology, chemistry, calculus, and psychology over 10 weeks, you take biology and psychology during the first 5 weeks and then calculus and chem the second 5 weeks.
From an information processing perspective, it is much more beneficial to have four classes over ten weeks than two classes over five weeks. This is because the mind needs the extended time to digest the material that it is being exposed to.

The two class approach is highly beneficial in allowing students to focus. However, the reduction in exposure to the content over time makes it difficult for retention and to acquire in-depth mastery of the ideas of the curriculum. 

I have worked at several institutions that offer "intensive" courses for working graduate students. The students will take one class over the course of one week (about 8 hours a day). In such an intense format the students remember very little and demonstrate limited mastery of the content. This is due to the rushed nature of the course. Even though the students were able to focus, the average individual just cannot digest that much content so fast. 

Sadly, there is more to learning than just seat time. Students need time to discuss and apply the knowledge they are exposed to in a course. This only becomes more challenging as the number of weeks a course lasts is reduced, even if the number of hours stays the same.