Why does Thai Lion Air use loads of 737 ERs for 1-2hr routes?
Operationally speaking, this may come as a surprise, but it's not the range of the ER, rather the additional exits and flat bulkhead, which allow more seats (note: Lion Air was the launch customer of the -900ER).

Exits: even if there is room for more passengers, a limiting feature is typically the exits. More exits, more passengers can evacuate in the same duration in an emergency.
Bulkhead: the typical bulkhead is spherical; a flat one would allow more floor area.


The 737-900ER is the same size as the 737-900, but can carry an 26 additional passengers in a one-class configuration. It incorporates an additional pair of exit doors and a flat rear-pressure bulkhead that boosts maximum capacity to 215 passengers in a single-class layout.
— Boeing 737-900ER roll-out in Renton; flightglobal.com; 10 August, 2006


(planespotters.net) One additional exit per side.

(airliners.net) An example of a flat bulkhead on the Boeing 727.