Oh, my, god, that is Not Good, man, NOT GOOD. I'm waiting for an answer on this also.
How did you know the Bounty is in Falkreath, though? Mine just says Largest Bounty & Total Lifetime Bounty.
If you bring up your journal, then click General Stats, then Crime, it lists bounties. Mine distinctly notes Falkreath Bounty at 40.
1. Very easy. The map is divided into regions and each region has a capitol and maybe some other holds that falls under it. Crimes committed outside holds (wilderness) will give you a bounty for the area you are in which means any guard from any hold in that region will react to your crime once they see you.
2. Answered already.
Right, I know that. The thing is, I had not been anywhere near Falkreath my entire game thus far. I walked there from Riverwood or River Run or whatever the town is called, killed nothing but a dragon and some wolves and a Fire Atronach on the way to the nearby barrow, cleaned out the barrow like normal, did not encounter anything other than skeletons and two vampires, which I killed - got no message that I noticed about killing a witness, although perhaps that is what happened? It was all pretty straightforward though. Weirdness. It's only 40 gold and my speech is high enough that I can sort of blow off the guards and they leave me alone.
That barrow is included in a quest, and an NPC essential to that quest makes her home there. She is also however, a citizen of Falkreath. Could it be possible that you accidentily hit her? Or even better, that you thought she was an enemy, killed her, walked out? Normally you would get a 'lost witness' message, but she is, sadly, essential. Thus you gain 40 bounty.
I killed two vampire thralls and a master vampire there. Those were the only "live" people I saw. The rest were draugr and skeletons. The vamps died as normal. So, yeah, weirdness. Not really hindering my game any, just strange.
thanks for the info on the map thing, I will try it when next I log in. It is irritating to have the map pointer there permanently.