When you are dealing with websites, image file size is a trade off between quality and download speed. There's not a lot of point to having high quality images if they take too long to download in the browser.
Nowadays we also have to consider the device that the end user is viewing the images on. An image that is optimized for viewing on a large screen is total overkill and unsuitable for those using mobile devices.
Really we should be supplying different versions of media files for different devices using @media rules in the stylesheet but this is rather outside of the scope of iWeb. If you use the built in image optimizer and the iWeb Photo template with slideshow, the application will optimize the images according to the way in which you set this function in preferences and the slideshow size will be automatically reduced for those viewing it on smaller screens.
If you want to give your viewers the opportunity to view large, high quality images, you can supply them as a download.