Again a reason to have a big map, you actually CAN make large cities without them being door to door, you can place several smaller settlements without them being within earshot from each other and you can actually make farms that look convincingly large.
It's also much harder to maintain a decent level of detail and variety in your map, which seems reason enough NOT to have it for me. I'd much rather have a smaller map that remains interesting to explore than a large one that mostly has large expanses of nothing that are so boring I wouldn't want to set foot in them even if I knew there was a chance I might find a dungeon or something.
But the small size of cities was mostly a concequence of the map being smaller than it realistically would be, and honestly, it worked fine for me. Oblivion's cities may not have been realistically large, but as far as cities in a game go, they worked, if I were to have a problem with them, I'd say it's that they didn't have enough personality or that they weren't populated enough, but the former has nothing to do with their size, and the latter could likely be adressed by going the route most other RPGs use and adding in some nameless, random NPCs who don't have much to say, which would actually be perfectly fine with me, it's not like most of the NPCs in the Elder Scrolls have anything
interesting to say anyway. They have dialog, but for the most part, it's so boring that I hardly feel inclined to hear what they say, and it's not like in real life, you feel the need to stop and talk to every single person you see on the street.
Now what Oblivion DID need was more population outside of the city, honestly, most of the farms in the game looked like they might be able to feed their occupants, and maybe could give them a bit left over to sell, but they were neither numerous enough nor big enough for it to be believeable that they could feed the entire province, and the small settlements really seemed far too small to be a believable town or even a village, I mean, the settlement across the bridge from the Imperial City (The name escapes me at the moment.) had only
one house and an inn, and the inn even had its own map marker, implying that it's meant to be a separate location that just happened to be right next to the house, that's not a village, that's one man living alone near a big city, when I think of a village, I would at least imagine something like Maar-Gan in Morrowind, not that. I don't expect full realism in the map, I just need enough that while playing the game, it isn't obvious that the setup Bethesda went with is completely implausible.