Actually, I was considering "small and confined" to mean Fallout 3-sized areas...
Small and confined, to me, is something like Gecko in FO2. There are a couple areas of that town...4, I think, and there are plenty of quests there, but there is very little to explore. A similar area in FO3 might be one of the downtown sections, but even then, there just seems to be more exploration value in the FO3 section. Less quests to be sure, but more to explore.
Compared to FO2, the entire world map of FO3 is pretty small. Denser, by far, but still relatively confined.
Again, not talkinga bout physical space per se, but the potential for exploring and finding surprises.
Whichever way they go - it's really a matter of how you spread out the actual playable areas. Regardless of what you do, it's going to total about the same "playable" area - what you can explore on-foot during regular gameplay. The actual square footage of the world all together that you explore in 3D is less a matter of system resources, but the art resources you have at your disposal to create that area. Fallout 3, for example, is as big and dense as it is because they simply didn't have more time to create any more assets than that. It will be the same with New Vegas whether they go FO3-style or FO-style.
Apparantly the game was to be much larger, and that area was reduced. Too bad for me, I guess. However, the bigger the open area, the better the exploring becomes. This is only true, however, if you can walk every part of the area...look in every building, behind every rock. It's not enough to have access to an area. The area has to be large enough to hide things in. More on the comment below:
As far as exploration - even if you're travelling on an overmap, you're still exploring and finding new areas. It's just presented in a different manner. The degree to which anyone cares is pretty subjective, though. There's no inherent benefit either way - they both do the same thing.
No, It's not.
The places one discovers are meta-places...like Den, or NCR. That's fun in a limited way, but to me it's very limited. That's it, except for random encounters. If you were to go through every square of the FO2 overland map, you owuld find a set number of meta-places and, aside from random encounters, "dropping out of warp" onto the play area yields one of a handful of set-piece, empty areas. In FO3, you may find a raider hideout, or a sewer grate, or a vault, or a building...all meta-areas with real content. You can choose how to appraoch this content...ignore it, or circle around for a better look, etc.
But like I said, I'm fine with it either way. It's really just a matter of how big an area they want to cover. If I can get everywhere on foot, that's fine. If it means going through an overmap interface, then that works too. It's all going to result in the same overall square footage of rendered environments, it's just about how they're all connected.
If that square footage is broken down in to chunks that are too small to hide content, it's going to be a gamebreaker for anyone who apporaches this game as an open, sandbox game. That sort of thing is not the Beth way, for better or worse. FO3 is a Beth game: Wide open, hidden content, contiguous play area (generally) and overland map fast travel. I would expect, and require, nothing less. Now FO:NV is an Obsidian game, and they are not known for their wide open areas. They are more likely to channel you towards their story content. There's a good chance that i will not get _what I want_ from FO:NV. That doesn't bother me as much as it usually would, because I would expect FO4 to be more in line with the typical Beth open sandbox architecture.