The space isn't discarded except in monospaced fonts. All the main computer layout engines (web browser, word processor) will add additional spacing there. It's also where line-width and inter-word padding are corrected first so often ends up being at least as big a space as you'd get double-spacing anyway.

Monospace fonts aren't considered generally more readable by people who make or work with fonts. Their particular strength is in reducing character ambiguity and preserving vertical alignment. But "readability" is subjective and depends on particulars of the specific font and of course personal expectation and preference. I find them almost always less readable than a good proportional serif font, except for code.

In monospace the dot is wider than in proportional fonts, thereby adding more space by itself. In addition, the space character itself is wider in monospace than in proportional fonts, relative to the average letter width. In combination, this balances out the difference from proportional typesetting, in my opinion. A dot plus two spaces is jarringly wide in monospace.

I do agree that monospace doesn’t make for readable prose either way.