I never SAID it was better, just a different way of doing things and not necessarily inferior to the full open-world method, as you had suggested. However, one benefit of having a more contained area of play would be that it allows the developers to focus their efforts into making the areas as detailed and content filled as possible. Sure, Skyrim's world looks pretty and impressive and expansive, but there's a whole lot of empty space there.
Incidentally, the first ever open-world RPG I played was Ishar for DOS back in 1992. By your reasoning, every single RPG released since then that either presented an entirely linear progression throughout the game world, or that used branching paths to expand the players choices, was only doing so because they lacked the time or resources to follow Ishar's example, which is clearly not the case.