1. What is the smallest town/citiy you have found? (I dont except THE smallest one cause there are so many)Any principality that bills itself as a "Village" is the smallest a place can be. There are 16 x 8 = 128 such places in Tamriel.
2. How much health and magicka do you heal each hour you rest?That is dependent on your Endurance. It is also dependent on where you rest.
3. Has anyone got a map/s of the generic dungeons?Once upon a time I posted those on the UESP Wiki. They may still be there if the mental defective that was editing that part of the site saw fit to leave them alone.
4. How many different 'house' layouts are there?Good question. I never took the trouble to figure that out, myself.
5. Level 10 is the max level right?No. Arena is theoretically infinite in levelling, I believe. However, there is a practical limit of about 25 levels due to the nature of experience accumulation.
Is killing monsters the only way to get XP?Yes, and the monsters scale, to a point, which is one reason why it is pretty easy to get to roughly level 20 but difficult to level after about level 22 or so. The other reason is the sheer weight of experience you need to advance at those rarefied levels.