Collapse / Reduce Size of Song Header

The area at the top of each song (in live mode) takes up way too much space. This needs to be collapsable to just one line. For instance, the background video playback controls are showing. For those of us using small laptops, the limited screen space could be better utilized for more slides.

Whether this can be done now or not depends on what you are wanting overall.
If you want all displays to show the single line, it is a simple edit of each song. See https://www.worshiptools.com/en-us/docs/103-line-breaks for details. But I would encourage you to discuss this with your projector operators before putting it into practice - they would have to move to the next screen after every single line. Also, if the band suddenly decides to repeat a verse or a couple of lines, the operator will really struggle to keep up and know exactly where they should move back to on the display.
However, it is not currently possible show songs with a different number of lines. Again, if you are asking for this, think about your operators again. They will have to keep track of two different layouts and number of lines on the screens. When they go to the next screen, are they doing it for the 'mini' version of one line per screen or the 'normal version of 3 or 4 lines per screen? And what do they do when both need to be moved forward at the same time.
While it could be programmed, it would need your song database to be totally updated in order to indicate the line and screen breaks for each set-up.

You've misunderstood my request. If there's a manual that describes the sections in your software, it would be helpful for me so I can denote the area I'm talking about. I'm not talking about the slides for the lyrics. I'm talking about the large rectangular space above the slides. If I could provide a screenshot, I would. In our software, this area contains playback controls for the background video.

I agree that I do not understand your request. I don't get any "large rectangular space" above the slides. Nor do I see any playback controlb on a background video.
So, a question. Are you extending the desktop from your Presenter controls onto the projector, or duplicating it? Check here for how to set up the projector https://www.worshiptools.com/en-us/docs/140-pr-screens and https://www.worshiptools.com/en-us/docs/9-extended-desktop-windows
See if these help you get what you after.

How about you look at this screenshot? https://1drv.ms/f/s!Ao48FOeMs8JwhekwyVr07Gk4l1z7gQ?e=B3FqHl

I can see what you are talking about. But this is only the editing screen, not the proper display screen. When you add the video into a service plan as either a background to lyrics or as a video in its own right, you do not get the area that you are complaining about. Hence my confusion.
Here is the recording from the most recent Sunday service at Leamington Spa Baptist Church. when we had a video. https://www.facebook.com/LeamBaptist/videos/958677228530144/
The video starts at around 29 minutes into the service. As you will see, it plays full screen, with no controls of any sort visible. There may have been controls visible on my operator's screen (it is several weeks since this service and I cannot remember all the details), but they were completely hidden from the congregation.

Here I thought you were an employee of worshiptools. This is the operator screen. I wouldn't expect that to display in my public video feed, if I had one.