I believe that the short story IS a fascinating form of literature. I am amazed at the skill involved to tell a full and satisfying tale, with fully developed characters, often combining suspense and deep meaning in a short amount of space.
Each word exercises great economy. The tale is focused and direct. I think this awe I have for good short story writers started with Kate Chopin's "The Story of an Hour." So much takes place in the story, and I knew I was totally unprepared for the ending! I was blown away. These kinds of surprises I love: when someone in one art form or another can still surprise me without beating me over the head with violence or aggression.
Since then, I have developed a real joy in reading short stories. Some of them are truly wonderful tales that engage and do not disappoint. What skill! They are a fascinating form of writing. I just love 'em.
I think short stories are fascinating because they allow the author to focus on creative use of plot, characterization, point of view, literary devices or anything else. Short stories give writers freedom to explore new ideas and abandon convention in a way that may not be sustainable or desire in a book-length novel. Sometimes these literary experiments do turn into novels, and the short story serves like a sketch does for an artist. It's a practice run.
Short stories (traditional) are a great source of literature. However, if you're looking for a fascinating form of literature you should check our short-shorts/flash fiction or episodic fiction. These are more contemporary genres, and as such are perhaps more "fascinating."
I love short stories like those of O. Henry, Saki, Roald Dahl, and (to a lesser degree) DeMaupassant. I like them in part because they are somewhat like poetry -- they have to do many of the things that a novel has to do, only with fewer words. It is interesting to see how an author tries to flesh out characters enough to make them interesting when he or she has only a short space in which to do it.
Short stories are also easier for me to understand as an amateur (not a literature teacher). They can be easily consumed because they don't take that long to read and are easier to follow. This means that I don't have to devote the kind of time and attention that are needed to really assimilate a longer work.
Well, obviously this is a very subjective question so your response is going to vary from person to person. You might benefit from posting this question on the Literature Discussion Board to gain a wider input. However, from my perspective, the short story is most definitely a fascinating form of literature. What I like about short stories is that they need to achieve what a novel achieves in a much shorter length. This means that they are often far more "pointed" or abrupt in their style, as the authors are not able to have the luxury of taking a long time introducing us to characters, plot and the action of the story. They must start in the middle of things, and thus short stories are a much more condensed form of literature that requires, in some ways, more work to unpack.
Although some might disagree, I think of the short story as being in some respects like a mini-novel. It may have an overarching theme, but it may also have subthemes as the novel does--it is not that limited. As for their significant differences from the novel's structure, short stories are also more malleable teaching tools in a sense, because one is dealing with a smaller canvas. It is therefore somewhat easier to point out--and for students to visualize--how the various elements--plot, setting, character, mood, etc. work together to create themes. One can also select short story materials to accommodate a wide variety of interests and reading levels--from the simple (The Most Dangerous Game) to the complex (The Garden of Forking Paths). In sum, short stories need not be appetizers for the main course; they are sufficient unto themselves.