If you assume that Nirn still has the same basic physics as real world (force of gravity depends on the mass in the same proportion, etc) and about the same daily/monthly/annual cycles, it's safe to assume that In-game time scale (1 min to 1 real-time sec) already implies Iliac Bay is still much larger than what is seen in a game.
Fast-travel indicates the journey from Daggerfall to Wrathgorian Mountains takes nearly a month, though we don't know how well developed transport infrastructure in High Rock/Hammerfell. Take also into account relatively rapid changes in climate zones, and I think it's reasonable to pre-conclude that Iliac Bay is as large as Mediterranean Sea.
However, it can be entirely incorrect to rely on any in-game data at all, since Morrowind clearly breaks the Daggerfall scaling — ship and silt-strider trips take just few days, that should be impossible given Daggerfall fast-travel timing. I tend to believe that Morrowind/Oblivion/Skyrim world scalling is complete crap though and Arena and DF gave relatively believable estimates.
What do you think? Is there any reliable in-game evidence regarding world size at all?
![Very Happy :D](./images/smilies/icon_e_biggrin.gif)
Also, how long do jorneys take in Arena in relation to Daggerfall? Would be interesting to compare trips between the same locations in both games.