Many thanks for the link, Peter.
Quote from Wikipedia:
"The sensor sizes of many compact digital cameras are expressed in terms of the non-standardized "inch" system, as approximately 1.5 times the length of the diagonal of the sensor. This goes back to the way image sizes of early video cameras were expressed in terms of the outside diameter of the glass envelope of the video camera tube."
As a unit of measurement for today's compact camera sensors, this seems completely bonkers! It only confirms the validity of my question: why can't they just state the height and width in mm!?