I think that it's the Distant Land thing (Morrowind Graphics Extender?) that makes the world feel small rather than the other way around. The problem is that it makes exploration and map markers largely redundant. I don't mind increasing the fog distance for a tiny bit, but, to me, getting rid of it altogether makes for a vastly less captivating experience.

EDIT:
Yes, the Distant Land thing mentioned above also makes one of the most prominent cities in the game visible _very_ early in the game, which most certainly can't have been the original intention of the developers.

Yes but I like to see the whole land all in my eyes, yes Vvardenfell is small (and Solstheim is smaller) but they are still big enough lands to explore, GTA 3 and Vice City on PS2 had bigger Draw Distance and I did not mind the world being too small.

For once, you and I totally agree on something - only using official patches is the way to go for a first playthrough.

Have you actually tried playing Morrowind extensively with an increased visibility?
a) you can actually opt to increase it just a 'bit', still retaining the fog
b) Vvardenfell is build in such a way that whereever you look, there's something blocking your vision, usually hills or such. As a result, the feeling of 'large world' is not really removed - the same tricks which make the world seem bigger while walking around also work for visibility.

Playing MW with only official patches? Have you learned nothing about Bethesda games?

Even if you want to do a completely vanilla playthrough, you should still use unofficial patches for bug fixing, try these:
http://forums.bethsoft.com/topic/1398294-unofficial-morrowind-patch-thread/
http://morrowind.nexusmods.com/mods/19510/?

Yes, because to get an authentic experience, it is absolutely essential that your program crashes regularly, that quests don't work, that you need to wear one piece of armor to make your Unarmored skill provide protection, that increasing your Mercantile skill causes you to get worse deals, that you cannot see rings (because they have no texture), that your performance degrades (because the global scripts keep running after their job is done), that your quest list becomes cluttered to the point of becoming completely useless (because finished quests don't get marked as finished), that an entire month is missing from the calendar, that blind enemies get a bonus on their attacks instead of a penalty, that subtitles don't always match the things you hear, that you cherish the spelling and grammar mistakes, and that your savegames corrupt before you have a chance to finish game.

Right ... ;)

Speaking personally, I play a game to have the best experience possible; whether it is "authentic" is a matter of complete indifference to me. That's especially true with a game like Morrowind, where playing it vanilla "for the first playthrough" is a hundred-hour investment.

Depends on what a playthrough entails for you. In separate games I've put in over 400 hours, but I've never once beaten the main story. My most recent game, 35 hours, was the first time I ever put any serious time into the main story. It was also the first time I ever used mods and the scripting tool (To reset NPC positions)

Morrowind is a massive time-sink I have to say, I think last time I played it spent over 200 hours before I even touched the main quest, just walking around the roads and ding stuff for guilds, it also sucks being so OCD about RPG's because in MW I always feel like I have to loot absolutely everything I can without getting in trouble, meaning I will do countless backtracking to merchants to sell all that crap because my character is close to encumbered.

What does OCD and MW stand for?

what about - oblivion 's engine >[url=http://www.youtube.com/watch?v=sRziN4VQNl8]video

Morrowind
Obsessive-compulsive disorder

That reminds me ... the Morrowind character that I put the most time in (could be more than 1000 hours, definitely several hundred) was a pure mage, i.e. very little strength and carrying capacity. And for whatever reason, I had determined that he would collect dwemer cogs - that are those huge useless cogwheels that weigh 50 stones each, meaning he could barely lift a single one of those in the beginning. And he really did that. He collected every single dwemer cog that he ever encountered, and lugged it to his stronghold. Lots and lots of them. Those were the days ... ;)

One thing I will say is that for me at least, it was difficult to play a mage role. There's a couple hundred spells with variations, your Mana pool is tied to one of your attributes (a limit of 100) and some spells get really expensive to cost. To improve your ability you have to cast spells, but to cast spells you need mana, to get mana you need to sleep a lot or have a lot of potions. I always found that a bit difficult to really put time into being a mage, other than conjuration spells for supporting my normal combat.