In our lab we have setup a RS485 network with short cables and the network is working fine. I know that terminating resistors are required, especially with longer cables lengths due to reflections on the line. Why do shorter cables work correctly without terminating resistors, and why do we not see a lot more reflections on the shorter line?
Oh, the reflections are there, don't worry :-). It's just that for short distances the delay of the reflected signal is so short that it won't distort the original signal much. Think of a 1 µs pulse, in a typical cable that will stretch over 200 m (at 2/3 \$c\$). Then at a 2 m cable the reflection will come after 1 % of the pulse width, and the distortion will be limited because the phase difference between signal and reflection will be negligible.
But at a 200 m cable the reflected pulse will go all the way back to the source until the end of the pulse arrives at the receiver's end. Reflecting again and you'll have ghost signals after the original signal has ended.
Lengths between 2 m and 200 m will see much more interference between original and reflected signal. The rule-of-thumb is that you consider transmission-line effects when the length of the cable exceeds 1/10th of the signal's frequency. Then the cable's impedance and the terminating impedance must be matched to avoid these reflections.
Note that it's all because of the limited light speed, however fast we always see it. If the light speed in the cable were infinite there wouldn't be problems like signal reflection with unmatched impedances.