The game works on game units. A ship such as the Orion is X number of game units so therefore, to make the ship actually look like its 1.9km long means that the ships have to fly at Y number of game units to make it work.
It has nothing to do with realism or a long and involved thought process, its just the easiest, simplistic way to do it.
Actually when Volition was developing FreeSpace they hated this about X-Wing and WC, and so to scale their vessels to appear large they decided to base ships on real units.
One game unit equals one meter, and every single FreeSpace ship is to scale.
No trickery or work arounds there.
In order to give FS ships the majestic feel when flying past them, speeds were given a limit under 100m/s or so for thrusters, under 200m/s for afterburners as a rule.
Also to the people thinking FS ships seem small, it's all due to the mission design. FS2 didn't take as much advantage of ship sizes as FS1 for making "beauty shots and camera angles."
In the first FS1 mission, Eve of Destruction, the GTC Orff seemed to dwarf anything I'd seen in the Wing Commander games.
All due to the initial angle...
Staff member FreeSpace Watch http://freespace.volitionwatch.com/