Implemented halved tiles. When designing an isometric engine, there are numerous decisions one has to make:
1. Will the engine allow truly 3d world without hacks? Like i.e. room over room.
2. Would the game world be cell-based, continuous or combine both approaches?
3. For cell based worlds, one has to pick unit-sized cell. Like i.e. 32x32x32 cube of 1x1x1 voxels.
4. What would be the cell format? Are walls going to be embedded into tile as well as floor or use separate tiles?
For example,
1. Magic & Mayhem has cell based world, but uses 32x32x16 cells. That approach is simple and robust, but requires splitting everything into such very small tiles or use some ad-hoc hacks for topologicaly sorting larger tiles, so they won't be ovedrawn with tiles behind
2. Original XCOM uses 16x16x16 cells and embed walls and floor into these cells, making it very involved to say trace a bullet path, while walls look really thin and units cramped into walls. Now cels can block vision from one side, while allowing to see from another. Such approach also greatly impedes dynamic effects, like water flows. XCOM also allows fatter walls, further complicating engine. Yet it is very efficient, because it greatly cheapens topological sorting and extends map size, because walls are stored as part of cell and sorted with it.
3. Furcadia uses approach similar to XCOM, but walls can have any height, yet they still look very thin.
4. Ultima 8 and Faery Tale 2 use continuous world approach with cell sized tiles.
5. Final Fantasy Tactics allows only varying floor height. Many similar games are lazily implemented by making each tile type into a long pilar, which is just moved up or down to accommodate for height, instead of introducing proper tiling and draw order sorting.
6. Diablo have just floor and objects on top of that floor. The simplest type of isometric game to make.
7. Stronghold used some very complex approach, basically splitting every building into very small cubes, supposedly automatically. All these crenelations on towers properly obscured units. One of the more complex isometric game engines. Still unsure how the implemented pathfinding.
Anyway, picking base cell size doesn't really limit tile size, with some hacks one can implement finer 16x16x16 tiles in 32x32x32 engine.