Its easy enough to carry 70000 people in a ship 1200m long. But its not possible to have the open spaces (parks, hospitals, stadium, hotels, shopping mall, movie studio, quiet living neighbourhoods and a FREAKIN MILITARY BASE that we see in the TV series) in a 1200 x 400 x 400 (approx) box even if the box is pure internal space and nothing else. Note that in the TV series, they are arranged in a typical town layout without houses stacked on top of one another.
Its just artistic licence. I just imagine the Macross to be 5km long in my own internal universe.