"are these smaller becasue they were in fact smaller tanks"
They are actually smaller tanks, although the scale of the models in the game isn't always completely consistent.
http://4.bp.blogspot.com/_L1vlbK3vPMk/TTmBpnOSEmI/AAAAAAAADc8/VwADxqFnA74/s1600/file024.bmp is a picture showing a British Crusader passing a Panzer IV -- and this is before the PzIV got the additional side-armour. Even discounting the perspective, the wrecked Panzer is clearly larger.
Arguably, in the desert, this was not the advantage it might have been because the Panzer was an easier target on wide open spaces...
The war in the desert happened in the 1941-43 period, whereas the Sherman/Tiger tanks of the original box set are from 12-18 months later during the fighting in Normandy. The tanks increased in size to accomodate bigger guns and more armour. If you can get to a decent tank museum, it's quite illustrative how the tanks evolved through 6 years of war (The PzIIs used by the Germans in the invasion of France in 1939, for example, look small compared to a modern car!!). Particularly if you can get to the tank museum in Dorset, England where they have a restored Tiger (the only fully functioning one) and the size comparisons with earlier tanks and against contemporary allied tanks is striking. When you've seen the size of it, you can understand why it provoked the reaction it did.