Well, it seems counterintuitive because of the difference in scale of zones like West Karana and Felwithe, but it's actually because of hardware limitations in 1999. You'll notice that even though West Karana covers a massive amount of space, everything is really sparse and spread out, so in terms of data that your system has to compute it's actually quite small - 2.5 MB smaller than Felwithe. In cities everything is cramped really close together, so you have dozens of objects and buildings and NPCs which end up being about the same amount of information as outdoor zones several times larger.
I'd imagine West Karana being so massive was partly an accident - as they were designing the zone they probably realized they could make a huge area and still have tons of room to spare as far as what systems in 1999 could handle memory-wise. And being that EQ was more or less the very first fully 3D online RPG, they didn't really have a very good idea as to what would be a reasonable amount of space for an outdoor zone and went crazy with the Karanas.
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