Weird. When I export one 9.9 MB jpeg that's been edited, it becomes 4.4MB-- but it had lots of sky, so compression was very efficient. Another, a sports picture, was 12.2MB and it became 12.1MB. So it's all about compression. The picture you show has lots of solid background, so it should compress a bit, but I'm totally surprised at a factor of over 10! I agree, something sounds odd. I also tried exporting to iCloud disk, but that made no difference.
The dimensions are the same-- when you blow up the 700KB version, how does it look? Do you see lots of difference?