Shrinking the current overworld is a major mistake. Exploring the vast levels of PC Classic was one of the great joys of playing back in the day. Did you know that there were both regular levels and also underwater counterparts? It added a whole other element to exploring. And swimming all the way the frick out to Avalon was, believe it or not, fun.
PC Classic was huge, but it wasn't a problem. I believe that quests are what really filled the void. They weren't perfect, but they were extremely fun.
People may object to quests because there is no "replay" value. Well, that's wrong. Older players would always help newer players through the quests. It added an element of community and purpose to the game.
And then after completing the quest, a player would never look at an area and think, "oh, that's an area with no purpose, it should be deleted." They would say, "that's where that great quest was, that was fun. Let me go back and help others through it."