Why is the B737 altitude display unneccessarily ambiguous?
Because thats how old school "steam" altimeters work/look and glass cockpits were designed to work similarly such to reduce unfamiliarity when transitioning. Prior to the screen age a drum altimeter would have read out and increased in much the same way the glass cockpit does now. 



(source)

You will also notice the 10's and 1's place's are joined and rounded off by 20's. This has to do with the common arrangement of tick marks on any old altimeter as well as the fact that in a fast climb the one's digit would be unreadable. 

On any note, its not ambiguous to a pilot, its actually quite accurate if you know what you are looking at.