"Realistic fantasy world" is not the same as "similar to the real world". It should feel like a believable fantasy world, but it doesn't need to be a reflection of medieval Europe. If you want people to feel like this is a civil war tearing apart an entire province of a vast empire, don't portray battles with 10-20 soldiers involved. That's not a battle, that's a large bar brawl. If your engine can't show what your story demands, that's understandable. Just get clever about it. Offscreen that action, think more about scale, tell different kinds of stories. The problem isn't that the game worlds are too small - they're huge. They just suffer from a goofy sense of scale. Morrowind was not great at this, but at least it was only trying to portray one sparsely populated area of a fringe province. Oblivion and Skyrim have both gotten successively worse at it as the design goals and motivations behind the series have changed. By the way, you mentioned the Round Table before as an example. Did you know according to the legend, the Round Table was supposed to seat up to 1600 men?