I am unable to figure out why IE10 adds extra margin's or height to the green element below.
Expected style as displayed by most browsers:

Incorrect style as rendered by IE10.0:

HTML
<div class="row">
  <div id="box1">
    <div>
      Lorem ipsum dolor sit amet, consectetur adipiscing elit. Mauris dapibus vehicula lobortis. Vestibulum et justo porttitor, suscipit sapien sed, fermentum magna.
    </div>
  </div>
  <div id="box2">
    <div>
      Phasellus venenatis mauris libero, in maximus odio blandit eu. Suspendisse in purus sed.
    </div>
  </div>
  <div id="box3">
    <div>
      Quisque egestas feugiat ante, eget congue metus.
    </div>
  </div>
</div>
CSS
.row{
  display:-ms-flexbox;
  display:flex;
  -ms-flex-pack:justify;
  justify-content:space-between;
  -ms-flex-align:center;
  align-items:center;
}
.row>*{
  -ms-flex-negative:1;
  flex-shrink:1;
  margin:4px;
  padding:16px;
  display:-ms-inline-flexbox;
  display:inline-flex;
  -ms-flex-align:center;
  align-items:center;
  justify-content:space-between;
}
.row>*>div{
  -ms-flex-positive:1;
  flex-grow:1;
  -ms-flex-negative:1;
  flex-shrink:1;
}
#box1 {
  -ms-flex-positive:3;
  flex-grow:3;
  background-color:red;
}
#box2 {
  -ms-flex-positive:2;
  flex-grow:2;
  -ms-flex-preferred-size:495px;
  flex-basis:495px;
  background-color:green;
}
#box3{
  -ms-flex-positive:1;
  flex-grow:1;
  -ms-flex-preferred-size:173px;
  flex-basis:173px;
  -ms-flex-negative:0;
  flex-shrink:0;
  background-color:blue;
}
Does anyone know the cause or solution?
                        
Yes, it's a bug, and it's fixed on IE11.
To solve it on IE10 you can try the following, the result won't be exactly the same, but close enough:
Feel free to modify those numbers to adjust the result to the desired one.