They're trying to avoid entering smaller buildings cuz they're always loading the entire city. Not saying it's as bad as people initially reacted to it, but they're using a pretty high amount of memory to do this judging from the long ass loading upon initializing. Even if they're using loading zones to actually populate and paint the areas as segments, they're still loading a massive floor model. Interiors would need to be individually initialized using scant memory. There's no real reason to do this imo, considering there's no manual flying in this game from what I hear, but maybe I'm wrong.
Honestly, there were probably a thousand different better ways to do this so that they can accommodate a lot more interiors. From the leaks, they wanted to do Xenoblade X without the knowledge of how to make a Xenoblade X. That game didn't exactly inflate the entire area all the time. You had a long loading in between regions during fast travel as a result if you didn't fly there manually.
"Iwata was awesome" - Mr. Nintendo
https://i.imgur.com/krtFHol.jpg