The "huge" icons just compensate the fact that your on screen resolution is not anywhere as fine as the human eye. At the same distances we here in the game do only see a black dot, you could see much more in real life. Type of plane, heading & such. Unless immersion means you would like to feel like a fighter jock with exceptional weak eyesight, the icons are a needed compromise. And as we lack real three-dimensional depth perception due to a flat screen, the distance information is even more important.
But if YOU really want that immersion, you can of course always switch icons to "friendly only" or even "off" using alt-I toggle