If you put the cursor on it you'll see an error message at the bottom. In this case the case expression is inexhaustive because it's only handling lists of size 0, 1, and 2.
(Haven’t worked with hazel and I couldn’t find much in the documentation so this may be wrong)
Because that case is non-exhaustive. It will match a list with 0, 1, or 2 elements, but the last arm matches a list with exactly 2 elements, not 2 or more, so as soon as you get to 3 or more elements, there’s no code to execute.
But small question related to https://hazel.org/build/dev/, given
> Non-empty holes are the red boxes around type errors
... why is the case statement in the list example red-boxed?