I don't think that explanation makes sense. In the first paragraph it says that Yelang is the largest country in the region or area:

"但是由于邻近地区以夜郎这个国家最大，从没离开过国家的夜郎国国王就以为自己统治的国家是全天下最大的国家"

In the last paragraph it states that Dian neighbors (i.e. is in the region of) Yelang:

"...途中先经过夜郎的邻国滇国..."

So, as Dian neighbors Yelang, and Yelang is the largest kingdom in the area, then Yelang must be larger than Dian!