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Licensing question about the BSD

From: Steve
Subject: Licensing question about the BSD
Date: Mon, 01 Aug 2005 18:51:10 -0400
User-agent: Mozilla Thunderbird 1.0.2 (Windows/20050317)

I've been doing some reading about the BSD license, and GPL-proponents' criticisms of the old "advertising clause" as it existed prior to 1999. A chief problem that GNU had with it was that the requirement to acknowledge original copyright owners in derived works leads to bloated and unwieldy acknowledgment lists as code evolves and becomes included in generations of derived works.

However, as I'm reading the BSD license text on, I'm not seeing how that issue was resolved simply by removing the "advertising clause". The first two clauses of the current BSD license still seem to require a form of acknowledgment:

"Redistributions of source code [or clause 2: "in binary form"] must retain the above copyright notice, this list of conditions and the following disclaimer..."

Does this not mean that an incrementally-growing list of contributors must be acknowledged through retention of their copyright notices in derived works? For that matter, doesn't this verbiage imply that works deriving from BSD-licensed code must be licensed under the BSD as well... since the "copyright notice, list of conditions, and disclaimer" (basically the entire contents of the license) must be retained in "redistributions of source and binary forms, WITH AND WITHOUT MODIFICATION" (i.e. derived works)?

Since BSD-licensed code has shown up in proprietary-licensed Microsoft products, and since I haven't seen any mile-long lists of acknowledgements in BSD-licensed projects' README files lately, I think it's safe to say that my interpretation of the BSD license text is flawed. What am I missing, then?
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