I would personally like to keep the ship sizes as is.
It seems as if you made the ships 10x smaller in the images you've shown (correct me if I am wrong), but I would then assume the time to travel from island to island would take 10x longer as well.
I would find the extended times to go to a non teleport island to be tedious if not unbearable. I already find traveling from Cuba to Isla Tormenta to be annoying.
I would also be concerned about the performance changes. I imagine there would need to be a higher number of enemy ships to fight, which I imagine would hurt frame rates more than it already does.
I would also imagine finding ships for quests would be beyond impossible, unless ships are spawned at the same density, which brings back the issue of frame rate.
While I love the idea of realism and immersion, I don't see this as feasible without completely overhauling the sailing system, which I am not up for personally.
Just my opinion.
The ships are considerably smaller, not 10x smaller though. I scaled them down as I saw fit, so the ratios are slightly inaccurate and will vary from photo to photo. The traveling times would definitely increase, but every journey will be unique and will hold many possibilities. The ship count will increase, but they'll be spread out accordingly so they don't negatively impact performance.
Finding ships will be much easier than before, actually. If you previously took a look at the
high-seas expansion update you might have noticed the territory map I concocted. The high-seas will be split into territories - so you'll have a rough idea where the ships you intend to sink will be. Pirates will have to figure out the best route they should take depending on the weather conditions, too. This will make your journeys even more unpredictable. These weather changes also have the potential to affect naval combat through varying stat boosts for you and/or your enemies.
[If you want to read more about territories and weather system, check out the link embedded in the text above]
The territory idea provides countless opportunities to enhance the players experience. Random server-triggered events such as fleets, creature hunts, and weather changes will take place randomly in different territories, so you'll never know what to expect when sailing from one island to the other. Also, some territories (eg: Undead and Doomed) may have an attack-on-sight rule regardless of pirate bounty, so this is another challenge.
EDIT - Plus, more islands can be squeezed in-between pre-existing ones.
EDIT 2 - The weather system doesn't have to be graphically impressive. Simple effects can appear so pirates could determine the weather conditions and find out whether they are disadvantaged or not. Stat buff/nerf details would also appear to the pirate.