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Fascism as a government style/philosophy has nothing to do with the size of the country. Was Mussolini's Italy fascist? Yes, virtually by definition. What about Franco's Spain? Of course.
Fascism is essentially a very strong central gov't (with a dictator at its center), marked by suppression of any organized opposition, strong nationalism, control of the economic direction of the country etc.
A despot is different, having a single person with absolute power. While they are similarities between the two, they are clearly different, mainly in that there is a government in fascism where in despotism it is basically defined as the lack of a government. And as we all know from Civ3, once an empire reaches a certain size, corruption is so out of control in a despotism that you just have to switch gov't styles.
Nazi style fascism was also a different kettle of fish. Despite it being a common misconception, it wasn't until 1944 (5 years into the war) that the economy of German was totally switched to a war footing. Even early in 1944, there were still luxuries being made in Germany, when it would have been far better (from the Nazis POV) to be only making war material.
Cheers,
Dr. Charm
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