Considering in your first sentence, l' refers to a city, it can be rephrased to Pourquoi ont-ils construit cette ville aussi grande ?. l' is a pronoun that replaces the noun city.

The difference in meaning with the second sentence is very tiny.

Depending on the context, there might be a nuance, the second one might be a more general question, sort of Is it useful to build such a big city, in general?, while the first one might be more specific, sort of Is it useful for this city in particular to be so big?. But I bet in most cases, both sentences will be actually equivalent.

Note: the question is not specific to French language, actually. The same one would apply in English between Why did they build it so big? / Why did they build this city so big? and Why did they build such a big city?