Correct me if im wrong, but arent the zombies in Dead Rising less resource intensive because they are all pretty much random?
Well, being randomly generated doesn't make their AI any less complicated. Although I imagine they
do have very simple AI, the characters in TES games aren't that special, either. For the most part, they just walk around fixed areas at certain times of the day. They might stop walking and say something when someone gets near them, but that's pretty simple. There's not much complex stuff going on. The reason for having so few characters is probably just because they don't want it to look repetitive. They can't really write and record unique dialog for tons of named characters, I mean, there's already a lot. So their only option, then, would be a bunch of generic NPCs, like "villager" or "farmer," which gets boring.
As for the battles being small, I think that's just because they don't want it to be a mess. If you have a few dozen people running around and fighting each other in a relatively small area like Whiterun, it'll get pretty confusing.