This seems to be a popular style in javascript (particularly when using jQuery), but it's not actually valid ruby (edit: ruby 1.8.7, that is - see reply). The first line forms a valid statement, so the dots would need to be at the end of each line to indicate a line continuation. So it would need to be:
Which is slightly more annoying in that you need to modify two lines to add a new chained line (the line you are adding and the dot added to the previous line).
This also creates a mild headache when refactoring, as any change to the length of the "names" variable would force you to re-align the entire chain. You could do something like:
You are correct that it is invalid for 1.8.6. The code runs just fine in 1.9, though. I take advantage of many things that don't work in 1.8.6, so I'm not particularly concerned with my method chaining breaking compatibility.
I prefer the more-than-2-spaces indentation because, by the shape of the code, it is clearer to me that this is a method chain and not a change in control structure. That is also obvious by actually reading the code, though, so I'm fine putting that down to personal preference.
Great to know about 1.9 - just looked through the 1.9 changelog and saw it described as "Newlines allowed before ternary colon operator (:) and method call dot operator (.)", so it does seem like they are encouraging this specific formatting style.
I agree that the fully indented code is much easier to visually parse - whether that outweighs the refactoring cost is certainly going to vary depending on the team (in addition to personal preference, as you mention).
This also creates a mild headache when refactoring, as any change to the length of the "names" variable would force you to re-align the entire chain. You could do something like: