I'd say that isn't really the problem caused by large realms at least on AT. On AT, a problem rose when a large realm like CE and Tara became federated allies. And more realms joined over time. Can't do anything when the center of the map is owned by a giant federation when the game doens't allow you to travel too far. Can't meet your allies across the map etc.
I think what the game needs is reducing the effectiveness of having a giant alliance. One giant single realm can't fight a multiple realm alliance unless the alliance is poorly organized (which usually is the case with so many generals having different ideas).
