I would like to know whether the constellations that appear smaller in size from Earth appear small because they are located far away from Earth as compared to the constellations which appear larger.
As already mentioned by James Screech, "[t]he constellation boundaries are purely artificial boundaries". The stars in any constellation are usually not "related" to each other in any way. The 3D rendering of Orion suggested by pela is a good example illustrating this point. There are some exceptions to this rule; the Pleiades, or Seven Sisters, are stars found in an open cluster, meaning they actually do exist in physical proximity of each other.
Think of it this way: Imagine you take a picture of, say, trees in a park. When you are standing in the park, taking the picture, the trees will be of various distances to you, and have varying distances between each other. When you look at the picture, though, some of the trees may look like they are closer together than they are in reality, because the picture you are looking at is 2D; it's a matter of perspective. In my illustration below, the blue line is longer than the red line, but the distance to the smaller tree is much bigger in reality, simply because it's standing very far behind the tree in the foreground.
If we were to start drawing lines to trees which look like they are close to the leftmost tree in the picture, we would be far more likely to draw the red line than the blue one, and make that our "constellation". The same happens when people looked up at the starry sky back in the day; they looked at stars that appeared to be close to each other in the sky, because that could make up images they could imagine and see, in a similar way to how we may lie down on the grass during a sunny day, and imagine shapes in the clouds above us.