I'm not an expert, but if you're referring to capships, then those are actually quite big. Think about it - they often have to support thousands of crew members for months (weeks?), & they have to carry jump drives in addition to normal engines.
As to fighters/bombers (this applies to all spaceflight though), you should consider that planes can carry just combustible fuel and let atmospheric oxygen do the rest. Using combustion for spaceflight would require to carry the oxygen as well. The ships would either have to be huge if the oxygen was low-pressure, or have very compressed oxygen sitting somewhere ready to explode. And either way, the risk of catastrophic fire would be important.
Not to mention that combustion probably wouldn't be nearly as maneuverable as the ships in FS are. I think a big reason why they are so slow is, ironically, that having such engines with the maneuverability-power we see ingame all the time would make them very big and slow down the fighters/bombers.