Have you ever been in a situation where you really wanted to use margin, but used padding because you couldn't get two margins to "butt-up" against each other?

(use case: "this element is separated from the other elements on the page by "space", so I should use margin.")

The "collapsing margins" behavior is in the spec. It even has its own section. CSS 2.1 Section 8.3.1, "Collapsing Margins":

In CSS, the adjoining margins of two or more boxes (which might or might not be siblings) can combine to form a single margin. Margins that combine this way are said to collapse, and the resulting combined margin is called a collapsed margin. [...] Horizontal margins never collapse.

display: inline-block elements do not collapse margins.

Here's a codepen with two simple blocks with 1em vertical margin: http://codepen.io/nchase/pen/dPdepa.

If you add display: inline-block to the ruleset, you'll see that the margins will cease to collapse.