Why does this load bearing stud not extend all the way to the floor?
The load from the discontinuous stud is transferred to the adjacent stud through nails between the studs. (The other stud is also reinforced due to a notch for a light switch box or something.)

You should check this by counting the number of nails between the studs. They probably used 16d nails and each valued at about 106 lbs. of shear. (I’d expect about 5-6 nails.)