The large voxels (3d pixels. I know; they look flat) are a consequence of the huge world. They shrink with perspective, so you only see them when objects are very close. After about 10 feet, everything is crisply rendered.

Activate your map. Looks like you've explored a bit of the world, doesn't it? Now roll the mouse wheel to zoom out. Keep rolling. The bit you know shrinks almost to a pale blue dot.

If the size of the voxels was cut in half, then the resources required would double. And you know what? Close-up voxels would still be huge.

In time, it may be possible to use a different rendering technique for close-up objects. Knowing that we are looking at a birch leaf, say, the game could draw an on-the-fly birch leaf instead of a big square. That would increase the computation requirements, however.

Valheim's worlds are procedurally generated. No two are alike. In scripted adventures, the world is designed ahead of time. Your sight-lines are often controlled, and the game takes place in one small area at a time, which can take half a minute to load from SSD. But every rivet is present and accounted for and sharply rendered.

Valheim's recommended system requirements are astonishingly modest. That seems to be by design. I hope they keep it that way so more people can play this awesome game.