No, Microsoft has not reduced the size of the final package 
but the wonderful SQL Server Everywhere Edition has changed its final name to something more appropriate in my opinion: SQL Server Compact Edition.
SQL Server Compact Edition is an exciting new release that targets essentially the mobile market and will permit the grow of interesting new applications (I'm thinking about many scenarios for online and offline capabilities in an application for example).
Steve Lasker has many interesting news on this release. We're all waiting for the final RTM... 