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Bad art design.
Because until recently devs were too stupid to let all rogue specs use fancy swords, and realized we'd transmog right out of them if allowed. So they made bigger daggers so we could pretend we had swords.
But mostly because no one likes looking at their character fighting and realizing that you can't see them do anything cool because rogue visuals are bad, and combined with small weapons makes it even more uninspiring. There's plenty of tiny dagger models too though.
- - - Updated - - -
WoW to real-world size comparisons!
Dagger - > Shortsword
Shortsword - > Arming sword
Arming sword - > Bastard sword
Bastard sword - > Greatsword
Greatsword - > Sweet Mother Theresa on the hood of a Mercedes Benz wtf are you doing with that gigantic slab of metal?
Because size matters.
I like the size of the pvp daggers. They look good on my little female BE rogue.
The size is pretty much only okay on blood elf females, another problem is that if you do not have transmogrify weapon with some weak enchant glow, all daggers will just be a big glowstick. (gief hide enchants already)
Blizzard doesn't have the slightest clue how to size things properly in relation to one another. Just look how big Arthas grew in all the time up to the final confrontation. An upright standing worgen could do... things... with his testicles...
Your rights as a consumer begin and end at the point where you choose not to consume, and not where you yourself influence the consumed goods.
Translation: if you don't like a game don't play it.
I reckon the only reason we're locked into Daggers is because they're the 1.8 sec weapons.
Blizz doesn't expect people to have a brain anymore, so all swords are now the exact same 2.8 sec speed.
If I recall correctly the Hakkari blades for instance had a fast main hand, and a slow offhand.