@tedster - I don't think they're considering each searcher's screen size, at least not yet, but rather the lowest common denominator, or at least an average or 'typical' screen resolution that they've determined. My reasoning for this is based on:
1. It looks like sites with top left placement of the largest ad units (336x280) are getting hit particularly hard (I know - very small sample size, anecdotal, ...)
2. My site has a top-left 336x280 ad unit, and over 85% of my visitors have a screen width of 1024 or greater, which leaves lots of content above the fold.
I know this is thin, and I have to remember that this above-the-fold change is only one factor in many. Sites that aren't as strong in other ranking factors and/or ranking well against other less than competitive sites, will probably get hit harder on the ATF factor than otherwise...
What is the mobile browser width on the typical android phone?
@potentialgeek - maybe it is time to do exactly the opposite of what Adsense suggests, as here is their advice for optimizing your placement: "Higher placement is better than lower and left is better than right." Source: [url]https://support.google.com/adsense/bin/answer.py?hl=en&answer=187696&topic=30002&ctx=topic[/url].