I served my LDS mission in the Minnesota Minneapolis Mission which covered parts of Wisconsin and also the UP of Michigan. I served in the one area that covered the UP. We were stationed 40 miles East in a town called Ashland, Wisconsin. Ironwood, Michigan is the first city you cross into when you get into Michigan. I never even asked myself why that part of Michigan wasn't just a part of Wisconsin. It's a good question.
Fun fact: Once you cross into Michigan, there is so much more snow. What separates Wisconsin and Michigan is something called the snowbelt. The side of it Michigan is on gets way more snow than the Wisconsin side. Crazy!
As for why the northeastern states are so much smaller, it's because they were originally colonies settled by the British. Also, much more populated per square mile than some of the bigger and more rural Western States. It is funny how that all evolved!