I'm curious: why are some hub shells much larger diameter than others? Is it an aesthetic consideration? Or are there cost/functionality tradeoffs? Take for example this Dura-Ace hub -- pretty skinny. Same for a classic Campy record hub. Compare to this much fatter Tiagra hub, or a Phil Wood front hub. I'm just talking standard hubs, not internal gears, powertaps, dynamos, etc. [Addition after DR Hicks answer: nor I am I talking about hub flanges, but rather the barrel of the hub shell.]
A smaller diameter hub is lighter (and likely cheaper).
A larger diameter hub has several advantages:
- The bearings can be larger
- Since the spoke flange has a larger diameter, it also has a larger circumference, meaning that spoke holes are farther apart. This reduces the stress on the spoke flange with heavily-loaded bikes, and also makes higher spoke counts practical.
- Related to 2, the spokes, for a given "cross", leave the hub at a more oblique angle, meaning that the force of the spoke is pulling more tangentially and less radially. This again reduces stress on the spoke flange and also increases the rigidity of the wheel against torque.
A non-obvious disadvantage of the larger hub, when it gets MUCH larger, is that, for 3 or 4 cross, the spoke arrives at the rim at a definite angle. Unless the rim had been drilled at a matching angle, this increases the stress on the spoke where it enters the nipple, increasing the chance of spoke failure. But this is mostly a problem with geared hubs.
It's pretty much tradition to have larger diameter hubs on touring bikes and tandems. Not sure to what extent this is a practical measure vs "expectations" -- the larger flange looks like its built to be rugged, while the small flange looks "light on its feet".
I suspect the reason may be aesthetic. As you've noticed, the cheaper/entry level hubs have large barrels and the more expensive versions have narrower barrels. It must be hard to upsell a customer to a more expensive hub... there's not much to differentiate them apart from the looks.
Personally, the narrow barrels look sleek and fast to me and I might be prepared to drop a few more $$ on them if I'm putting them on a fast road bike.