So really size does matter. If you take two warriors of equal ability and pit them against each other, the taller one will have an advantage. He/She will have a greater reach and will be able to strike with more power. He/She also be able to move around faster and further with his/her longer legspan.

I believe first person view is lower than eye level so you can see clearly, the weapon/shield you have equipped. I don't like it at all but I think that's why the camera is lower.

Hmm but in Oblivion even in FP you were still taller when you were a Nord/Orc/Altmer. Something I really enjoyed about playing these races.

Real life fact:
The only people that say that without any sense of irony are.. small.

Something that annoys me too. I'm on xbox and can't alter my eye level camera but as it is the weapons and shields would appear somewhat lower down if eye level camera was exact.

If my hypothesis is correct I don't see why it was implemented. I agree with the general opinion here so far that playing a race which is taller is done so not only for racial perks but simply due to height.

Erhhhh. Yes. Because by 'Size' I totally meant height and was hinting at anything else. At all.