Of course, it was procedurally generated.
Later, Arcanum would try to do something similar, at least with a global map. It had premade towns and cities (and nowhere near as many of them, of course); but the landscape between them was done to proper scale, and it was all generated.
So, when you reached the outskirts of a town, you could fast travel, or you could just keep walking - and the distance (and time!) you'd have to spend to walk to the next town like that would accurately reflect the size of the game map. And even during fast travel, if you had an encounter (e.g. wild animals, robbers) that dropped you into the detailed map, you'd end up in the correct spot on the generated part of it.
Coincidentally, that made it possible to skip large parts of the game simply by heading to locations in advance that you're not supposed to find out about until some NPC tells you. And the game was actually designed to gracefully handle that, despite having a fairly convoluted main storyline.