Yes, because it's FF7. There is nothing in the feudal setting of The Witcher or Dark Souls that can compare to the attention to detail that just the complex multi layered Midgar requires. In FF8, they solved that problem with Esthar, another gigantic highly detailed city, by heavily restricting our access to it, limiting it to just a few specific areas, and leaving 98+% of it unexplored. And this was all pre rendered back in the day. Actually creating those kind of environments in real time is not something that the FF7 team thought of back in the day, and so they didn't let that restrict them when they made it.
However, even back then we weren't able to see most of Midgar. It's something they say they want to let us do this time, and I've always wanted to. Esthar as well, if they ever were to get to FF8:R.
And when I say highly detailed, I'm mainly refering to the technically advanced aspect of some of these cities and environments.
The Witcher 3 is a gorgeous and highly game. No doubt about that. What I'm saying is, it's easier to depict a roof made out of straw, or a wall made out of brick, than one with blinking neon signs, lights, screens, grids and movable parts, all surrounded by even more technology, and bustling with vehicles and people as far as the eyes can see. All with a lot more small details attached to them that just didn't exist in a feudal setting.

Final Fantasy 7 also had a lot of minigames. Some with their own game engines. Fort Condor, snowboarding, Bike race, submarine wars, the usual chocobo racing, rock em' sock em' boxing, etc. All of those are going to have to look, and work amazingly as well.



Even the G-Bike game is a far cry from what it needs to look like today. Keep in mind that SE said that the Advent Children character models were too outdated for Final Fantasy 7: Remake, so they had to remake Cloud and co in today's graphical standard. And then remember the bike chase scene in Advent Children. The characters and vehicles are going to have to look even better than that. While maintaining framerate at extreme speeds with a lot of action packed scenes no doubt.
Then we have Gold Saucer, Junon, Shinra Builting, etc, and of course an open world as well, that's not only set in a feudal setting, but mixed in with a technologically advanced society.

I really don't think it's realistic to expect all of that to be developed under a budget for a $60 dollar game.
It's not about how much they can fit on a disc, but how big their budget would be vs the return they would get.

Destiny announced two expansions before it even launched, and a season pass that people could buy on Day 1. And GTAV has microtransactions that reportedly have earned Rockstar tons of money. There are also technical reasons why a game like FF7 isn't comparable to parts of certain other games, but we could go on all day.
The point is, FF7 was developed under a budget suiting a $60 price tag. To recreate that today, and to even make it bigger, especially something like Midgar, which wasn't created with real time graphics in mind, would be a lot more expensive. And I think you are underestimating that kind of development process.

Believe me, I'm the first to be skeptical about spliting games into multiple parts, even for games I love, and some times even do extensive research on the subject. (My Fire Emblem Fates topic). I'm not entierly convinced, but I can see this being the best choice for this game and I will reserve my final judgement until I see how it turns out.
Not just to fit everything in it, but also so we don't have to wait until 2022 to play a full game. From the sound of it, with each game being a unique experience, probably with their own combat systems and whatnot, I'm reminded of some multi game series with one story that I've played in the past and loved, such as Xenosaga 1, 2, 3, .hack//G.U. vol 1, 2, 3, etc. I wouldn't want them condenced into just one game with just one battle system. But it would certainly be possible.