I'd much rather have cities and towns with hundreds of NPCs than the ones in Skyrim with 20. With larger cities, you can still have those 20 NPCs all with unique quests, among the other NPCs. If anything it would make searching for them a game play mechanic in its own right.
DO NOT TRY ARGUING WITH ME I DO NOT CARE - FUCK OFF.
If you have more than 64 actors loaded at a single time the game starts loading actors flying around in the sky without a mod to fix it. This is the bug that causes the infamous flying horses.
The base game is absolutely not capable of anything big. It has only been forced to be capable of it through modders solving problems bethesda ignored.