I honestly feel in most cases that 120% is too short in most "real" cases, but I don't tend to have sections of text where I can barely fit five real words on a line as you have in your example. Even my 5" phone doesn't end up with stuff that narrow.

The taller line-height -- for me at least -- aids in visually going back on longer lines. It's why I use 150% as my default on flow text...

But looking at your narrow examples? Yeah, then the 120 seems better, though a bit cramped and stuff. Perhaps for websites as part of responsive design, a min, max, or clamp based on viewport width could help with that? Rather than obsessing on a single value, use one that increases the line-height to 150% on larger displays, then dynamically shrinks it down to a 120% minimum.

Something to play with.

One also has to keep in mind that the font itself can greatly impact this, given the range of character heights, x-heights, descenders, and so forth we see across fonts where at 1EM, we get thousands of different ratios of capsline to baseline vs. font-size.