In the case you describe, html and body do take up 100% of the screen height. Add a background-color to see this:
body {
background-color: lightblue;
}
You'll see the entire screen is now coloured. The jquery statement you're getting .height() from is still only returning the height of the content, not being stretched to the height of the screen. When you have a scrollbar, .height() of body will return the height of all the content, not just the visible area. You can get the height of the window with $(window).height(). See this fiddle for a demo.
