It increases. I don't think the stats per soldier change but there's more of them so their overall HP increases. I play on large unit sizes because I don't want to get too far from what I assume is the sizes the game is balanced around. It also makes things a bit easier for my PC.
They have been changing the way spells work over the last few patches. Detonation mechanics, unit weights and so forth. The problems I've seen people mention with some spells, vortexes in particular, was some of them tossed enemies about a lot and units in the air didn't take damage. Wind of Death is an increadible spell vs masses of infantry, it tears through dwarfs. Curse of the Bad Moon and the Flaming Skull do less, partly because of their random movement, but they also have debuffs they apply to units they hit.
I do think there will always be a disparity between spells. Gaze of Mork and other multi-shot missiles are best used against large, single targets rather than units but even then, because the missiles spiral, not all of them will always hit. Firing them from an angle is better as well. I think a mage being on a flying mount, casting missiles downwards, would be best since all the missiles would hit the ground, rather than wiffing over the heads of a unit. Though, spells like fireball are also good on a flat plane because the fireball travels through small units until it either hits the ground or a large target.