re: Any reason why Tremont Waters would not come back next season?

I would say his slight build is more of a factor than height. There is a handful of great players his height, Isaiah Thomas and recently retired Nate Robinson came to mind. He has much of the skills they did, just thinner.
These players and several other were much thicker and stronger than TW. He needs to put on some weight so he is able to take the pounding that will come from the style he plays. I have to believe the pounding he took going inside this year were the reasons for the several bad games where he really got pushed around when he went outside.

Also, another positive is that he will have more and better weapons to pass to ball to so he can be more selective about taking the ball inside.