The application has a feature that's not available in the Android app: full-screen mode, so it doesn't make sense to use a such a big font size which is not even configurable. Google says that "the ability to easily enlarge the translated text to full-screen size" makes it "much easier to read the text on the screen, or show the translation to the person you are communicating with. Just tap on the zoom icon to quickly zoom in."
Why would you use the native application instead of visiting translate.google.com? The native application supports voice input for 15 languages, text-to-speech for 23 languages and it's better suited for quickly switching between multiple languages.
{ via Google Mobile Blog }