I think that you still misunderstand the passenger generation mechanic at a very fundamental level. The size of cities is irrelevant, as already written. Commuting passengers are equally likely to choose a destination anywhere on the map, whether in the same city or not, but, if they cannot travel to those destinations within their journey time tolerance, they pick another destination at random anywhere on the map and keep doing so until their pre-set number of alternative destinations has expired.
In reality, commuting is based on time not distance. Although the two things are, of course, related, they are very much not the same. This is why towns were able to grow outwards when and only when modes of transport (such as trains and trams) were invented and deployed to allow people to live in the suburbs and work in the centre. The function of the passenger generation system is to simulate the fact that it is time, not distance per se, that is important to transport.