It makes a difference there, sure, but SpaceX lowered orbits from 1,150 to 550km. Half the latency, but only by about as much as traffic between LA to SF incurs.
I was a bit wrong in my initial estimate. More satellites can't improve latency by much once they get dense enough, and it looks like Starlink has enough such that the altitude would be on the same scale as distance. Still doesn't matter for the typical home user. Like, I get 21 ms ping to servers in my local city.
The funny part is that by providing low latency service to them, they are (hopefully) going to be able to fund SpaceX longer to build rockets to get human colonies off-planet.
550km vs 1,150km might not matter, but it matters a ton vs 40,000km. Even without the bandwidth limits, I wouldn't be able to use geostationary internet for my normal usage.
Starlink has been LEO since it was first announced, so how bad geostationary internet may be is not relevant to the discussion about why SpaceX lowered the altitude.