For Muni, trials, street, flat, it’s a bit similar to BMX and downhill Mtb where seat height has to be a compromise between efficient pedaling and having clearance to the seat when standing on the pedals. (as with BMX, for a lot of flatland/street riders efficient pedaling isn’t even a part of the consideration.)
I personally like my seat a bit on the low side for distance riding too, I’m never sure if that is because I’m used to that position from my Muni, or if it’s possibly “objectively” a better position.
Riding position on a unicycle is pretty different to that on a bike (especially hip angles change due to that), and so are crank lengths, I wouldn’t be super surprised if the seat height for maximum efficiency is a bit different on a unicycle vs. on a bike.
EDIT: forgot to reply to the last part of the question… Even on a bike, the common seat height recommendations are that you have the knee fully extended if you have your heel on the pedal, so in normal riding position with the ball of the foot on the pedal, the knee isn’t fully extended. I’m no sports scientist, so there may be exceptions that I don’t know about, but generally fully extending a joint seems to be not advised.
Also, while you may feel “precarious” with a slightly higher seat,there aren’t any real dangers associated with sitting 20-30 cm higher, so I think it’s worth getting used to that feeling if it makes your pedaling better.