Okay even as a kid I got what this clever 1977 hit was really about. From the backlash it received, however, it was clear this song is widely misinterpreted. The good news for singer songwriter Randy Newman, was that the backlash created great deal attention and exposure for the song. It became his first big hit!
At first the song appears to be making fun of little people, but “short” is meant in a figurative sense. It’s really an attack on bigoted and prejudiced people.