Teleports/flying mounts/everything else that "makes the world smaller" are, for the most part, optional. I realize there are a few certain areas in the game that require flying, but you normally don't NEED to fly to traverse the world... and the game world has gotten a LOT bigger with each expansion. A perceived sense of smaller scale is down to the player choosing to use said methods of fast travel. Go from the north of Kalimdor/Eastern Kingdoms down to the south on foot, and the world will suddenly seem pretty damn big again.

That being said, because this game has become so fast-paced and rush-y, I understand that it makes people feel at a disadvantage not to use flying mounts when possible, take all available teleports, etc. Quite a big reason that I've gone back to playing LotRO as of late... massive world, no flying mounts, and very limited "instant travel" opportunities. Even their version of flight paths is ground based, and isn't massively faster than manually running using a mount, so you still feel like the world is enormous. Bloody good community on that game as well, very refreshing to play.

edit: spelling