You know, GAF had this discussion before - about how large cities in FF generally were much larger than their playable area - Lindblum, Midgar, Esthar, Bevelle, Academia, etc. In each of these there were (varying amounts of) playable areas, with the rest of it walled off, yet enough real estate to at least bring the sense of scale of the city. I think Altissia as it shipped also falls comfortably within this description.
I honestly don't think blocks upon blocks upon blocks of urban cityscape would make a compelling Final Fantasy experience - either there'd be way too little to do with half the streets and buildings being meaningless props, or too much forced-in content. GTA isn't just an open world game. It's also a sandbox experience. There's a fine but definite line between the two, really*. In GTA you create your own excitement, whether it's watching cops respond to a crime spree, racing through traffic laden intersections, etc. none of which would really fit into a Final Fantasy style narrative. It's the same reason you can't e.g. kill guards and get thrown in jail. Again, open world/non-linear vs outright sandbox gameplay.
Specifically for Insomnia, there's also the issue of crafting a giant explorable city only to lock you out of it for most of the game (you're supposed to reclaim the throne - narration-wise it doesn't make sense for you to have access to Insomnia content till you actually do take back the city in whatever hypothetical plotline). At most, it'd make sense for the assets created to be a series of areas designed to be set pieces.
*To be fair, prior to FFXV I wouldn't have been able to imagine an open world Final Fantasy where you're handed a controller and you could turn 360' and basically wonder what you wanted to do to start out with, so I guess anything's possible? Heh.
