Does size really matter? 28.5 vs 26
Instruments- discuss specific features, luthiers, instrument problems & questions
If using the same gauge strings, those on a dulcimer with a shorter VSL will require less tension to reach a given pitch than one with a longer VSL. This helps playability not only because frets are closer together making it easier to chord down at the first few frets, but also because bending notes is easier, vibrato is easier, and playing in general is just easier with less string tension.
But there *are* definitely well-known effects on sound as well. String tension and length affect overtones and harmonics. The greater the string tension, the greater the higher overtones produced. Longer string lengths also give more space for harmonics and overtones to “breathe” (ie, sound separate). With shorter scale lengths there is less separation. As a result, longer VSLs will give more brightness, clarity and definition in the tone, while shorter ones will give a “sweeter” sound with more warmth/darkness, less clarity and fewer overtones. Longer VSLs and their increased string tension tend to give you more volume and attack also, and more of that twangy “silvery-ness” traditionally associated with a mountain dulcimer.
Many guitar builders will tell you that the tone begins with the string and everything else is a modifier; that you start with the scale length and then go from there, choosing woods, body shape, body volume, type of pickup, etc. to get the tone you are looking for.
Incidentally, if you don't want to believe me, there are plenty of well-respected dulcimer builders who have written about scale length and its effect on tone before (Jerry Rockwell and Janita Baker come immediately to mind, for example).
updated by @brian-g: 05/06/17 09:15:32PM
Bill stopped playing last year. And I can say with all the love and humility I can muster that I helped him finish his last dulcimer. 
