I just think the screenshot isn't particularly flattering when it comes to size. Just wait until your character is standing right next to it's outer walls, then walk around it. It'll seem big.
also yeah there's this. all the information we've received regarding cities in Skyrim is that there's way more focus on verticality this time around than ever before. the player is pretty far from the city itself but the walls from that distance seem really big, and using Markarth as a scale, it's very possible that the buildings peeking over the wall are just really tall and that there's a ton of smaller single-story buildings that just aren't visible.