Because it's way more fun to only have 10 people to talk to in your realm than 30.
I was once a huge fan of little realms. I still do think there's a vital place for little realms: nor do I think giant empires are necessary great either. But I'm getting to where I really think 20-40 nobles, 2-3 cities is probably about the ideal size for most realms. Seems like big and small realms are super hit-or-miss on their ability to retain players.
I have always maintained that you need a certain critical number of players (
players not
characters) in a realm to make it a fun and engaging realm. I don't feel that in most normal circumstances that you ca achieve that in realms of less than about two dozen players. These realms tend to be too quiet, and not enough action happens. That's not to say that in exceptional circumstances it *can't* happen (I have head that Republic of Fwuvoghor with under a dozen characters was very active), that is definitely unusual. There is only a certain number of players that will really be active in a realm. The larger the realm, the greater the chance that you will exceed this inexact critical threshold and achieve a thriving, active realm. You can still get larger realms with high numbers of players that are boring and stagnant, but the chances are lower. At least on Dwilight, a 10-character realm would have ten actual people, and not five people doubled-up. I have also noticed that realms with a larger percentage of doubled-up characters tend to be quieter, more stagnant, and more elitist.
This has always been why I have so strongly opposed to "duchy as team" mentality. In order to really stress that concept, the game would need to make the duchy the default widest communication channel you have. For most multi-duchy realms, that's just too small of a circle to maintain an active, fun atmosphere.