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It seems counter to what a sandbox should be about.
If you're going to have player driven content shouldn't exploration, discovery and surveying be part of it?
If you're going to have player housing shouldn't you have plenty of space for it? Nobody wants a small world that's filled ass to elbows with houses.
If you're going to FFA PvP shouldn't you have a large world to prevent guilds from dominating the whole things? Even a large guild would have a hard time controlling a world that takes hours to tranverse.
Urban sprawl is ugly. Even uglier without urban planning like all current Sandboxes lack. A world dominated and patrolled by a mega guild. It's not fun to explore a sandbox filled with with sprawl and pk's everywhere. It just seems to lend well to have larger worlds.