That’s Ai being more respectful to typography, treating text as text and not just rendered glyphs.

This area below text is the descender area. So if you add some letters that has descenders (like y, p, j, g, q, or in other languages: щ, д, ӷ, ԯ, ŋ...) — the bounding box won’t magically increase the height.
Illustrator comes from the era when knowing this would matter and help to work with text efficiently, respecting the habits forged with metal typesetting, by people who invented digital type, for users who are familiar with the nature of type.

Times changed, rules changed, intentions are now more diverse... Modern apps (who can afford not respecting traditions) just ignore the descender (and ascender too) area and make it always hug the glyphs tightly. Rude but sometimes effective :)
I agree — being a professional tool, Ai should allow us (all of us, with various levels) to choose if we want the bounding box to hug text tightly (as if outlined), or according their actual M-boxes.

In recent years some changes toward this were made in Illustrator as well (sure they did, they made Font Height Options)
So, Align panel now allows us to choose if we want to align to the bounding box or the glyph outlines, like the screenshot shows.
It’s only half of the solution, and it’s rather hidden, and in won’t change the bounding box visually, but it's there to solve the alignment.

There are many people who posted on youtube and redit about this, but i didn't find proper solution. This glitch/error or whatever people says it is annoying. We need a alternate option or proper solution to get rid of this extra space below text. We faced a significant loss when I sent the file directly to the vendor for producing the cut-out letter signage without expanding the text. Without expanding text we can't see exact height of it.

Illustrator is the only editor that still draws the bounding box not by the dimensions of the actual glyphs, but by their em boxes.
CorelDraw, Affinity Designer, Xara, Inkscape, Photoshop... all draw the bounding box tightly hugged (InDesign drops out a bit because it doesn't have out-of-frame text).
Illustrator tried 4 years ago to make modes for text alignment, as stated below, but it came out non-obvious and hardly convenient. A partial solution. There are hacks, but they are, well, stupid.
We need to get it addressed.

Honestly, the recent "Set font height reference" feature has been one of the best features for the past several years—I'd say it's better than the text-to-image AI feature. "Align to glyph bounds" was another excellent invention. For some reason, the Illustrator team stopped there. We need this bounding box aligned to glyph bounds feature, too!

Yeah, that's what I (and Hassan, I suppose) mean. I know it's not a bug, it's just VERY annoying when you have a lot of objects close to (and behind) the text and you keep selecting the text by mistake.

You mean this?
https://dl.dropboxusercontent.com/s/xw40w426142evjs/text_bbox.gif
Well, AI does it right then. See, letters have descenders:
https://www.designersinsights.com/wp-content/uploads/2012/03/Anatomy-of-Typography.png
AI selects text based box around all elements of the text.
Still, it doesn't mean that it can't be made that it will select text only when you click in actual glyphs, but I expect it would take more power to calculate. This also means that you will have gaps in text where you can click and not select anything, if gap is larger than selection tolerance.
Well, you can ask for omitting ascenders and descenders for lower-case (and remember which glyph is uppercase too), but I afraid it will still confuse people.
I'll vote for this, but it will make a lot of tests and precautions to make it right.

Egor: The problem is the "selection area"/bounding box around the text, and the fact that it's way too big. You're constantly selecting the text by mistake when clicking other objects nearby. And when aligning, Illustrator aligns this invisible bounding box (I know there's a workaound for this but you shouldn't have to use that trick) instead of the actual text.

It would be nice if you could select (and align) the text by clicking the actual letters. As if the letters were expanded shapes.

I agree. That invisible (which for some fonts is insanely large) area around the text is very annoying. You keep selecting text objects by mistake.

Text Selection Area