So... Daggerfall takes place in top left of the world map...

What about Arena? Which part of the world does it take place in? How big is the world compared to Morrowind/Oblivion/Daggerfall?

Arena uses the entire world map, meaning you can visit anywhere in Tamriel. It's not how you would think it would be, though.

Everything outside of the cities is randomly generated, meaning you can't go from one city to the other.

Arena, although the whole world, is smaller than Daggerfall.
The games are scaled differently.

that makes sense....

how do you travel around in Arena? Fast Travel everywhere?

Anyone know why they wouldnt cover the whole world after TES1? why only cover bits?

You must fast travel to get to each city and important dungeons in Arena, since the wilderness is never ending.

They probably chose parts because they wanted to add more detail into the gameworld, and only focus on detailing one culture.