Whoa, hang on there! A day is the amount of time it takes for one day/night cycle, not the passage of 86400 seconds. A second in Istaria is still a second here. Take a look at your spells' casting and recycle timers. (They're in deciseconds.)
Your initial move speed calculations were pretty close. Istarian move speeds are in decimeters per second, so that speed of 220 would translate into 22.0m/s, or about 50 mph.
As for the size of Istaria, yeah, the explored land area is pretty small. The current client contains design assumptions that the world won't be larger than 65km x 65km, though with some changes, we could safely go to 2048km x 2048km... but who needs that much space, anyway?
What this means is that for RP purposes, you'll either have to accept that Istaria is kind of small compared to Earth; or that Istaria is comparable to Earth in size and its inhabitants just move unnaturally fast. Of course, we haven't considered things like the density of the atmosphere, or the mass of a dragon or biped, so maybe "unnaturally fast" isn't so unnatural after all.