1. It looks like you have built MCUXpresso with debug and no optimisation. This greatly affects the code size. By default, MCUXpresso provides two type of build: Debug and Release. Debug builds with all debug information and no/minimal optimisation to aid debugging. Release builds include optimisation - but you can change the optimisation level to suit you needs (speed vs size) - see this FAQ for more information
https://community.nxp.com/thread/388981
2. I don't know where you got instruction size from. All Cortex-M parts (M0, M1, M3, M4, M33, M7 etc) are Thumb processors which use 16-bit instruction width. MCUXpresso builds the correct instructions