A united Bavaria (consisting of the four duchies you mention) would have 29 counties, which would make it the largest duchy in the game. Currently the largest are Lombardy and Fars with 23 each; Azerbaijan has 22, Champagne 18, and Sicily and Bohemia 17 each. And a lot of these I feel are already too big. (There was also Haryana which had 20 but I split it up into three parts for exactly this reason.) So I might do a two-way Bavaria split, but combining all four into one would be too much.
And yeah I don't think the decision to split Sicily makes much sense from a gameplay perspective either; you're rarely going to want to give yourself a smaller de jure territory. I would rather have it imposed on the king from a powerful vassal, rival claimant, etc. so they can get their own kingdom without having to conquer all of de jure Sicily.
The division in Altbayern or Altbaiern* (Oberbayern, Niederbayern and Cham aka Nordgau/Overpfalz) was roughly that Bayern-München and Bayern-Ingolstadt made up Oberbayern and Bayern-Landshut and Bayern-Straubing made up Niederbayern. These currently still exists and date back to the Wittelsbach dynastic division of 1255.
As for the too bg duchies, reminds me of the good old days I had functional debates with
@Aasmul , my SWMH editor regarding the HRE. I personally both didn't mind big duchies and certain one duchy prince-archbishoprics, Salzburg, Magdeburg and Hamburg-Bremen were axed. For big duchies my benchmark were the already included big duchies.
One of the problems is division, while the stem duchy of Bavaria disintegrated in a sane manner, the peripheral regions were broken off, with the Bavarian core going to the former count palatine of Bavaria of the house of Wittelsbach.
The stem duchy of Franconia disintegrated, so we went with the Ostfranken and Westfranken division and longer lasting creation like the Palatinate (and later the landgraviate Hessen).
Saxony had a traditional division in Ostfalen (roughly later Braunschweig-Lüneburg), Engern (Angria) and Westfalen (originally larger than the territory, which the Prince-Archbishop of Köln got as vassals). Ducal authority went to the Askanier, with the provision they could establish themselves, later divided in Saxe-Wittenberg, Saxe-Lauenburg and for a while the margraviate of Brandenburg (the first to lost to other dynasties). During the same time that Bavaria was restored to Heinrich der Löwe and Heinrich Jasomirgott got his margraviate of Austria raised to a duchy and he gained the Privilegium Minus. Heinrich der Löwe was restored to a rump Saxony, after Heinrich der Stolze lost Saxony, they did gain the original Swabian archoffice of Archchamberlain (Erzkämmerer), by that point the Staufer (Hohenstaufen) also held the Franconian archoffice of Archsteward (Erztruchsess), they were also made direct imperial vassals, but unlike Austria and Styria, the new margraviate of Brandenburg was a bit too soon to be elevated.
Finally in Swabia we went Alsace, a margraviate of Baden (I originally wanted one more county there), Raetia for the now swiss parts (our duchy of Zähringen is the Burgundian (Arelat) part). As for the 3 way division of Swabia proper, The margraviate of Burgau was in Welf lands and/or their vassals. The Pfalzgrafschaft of Tübingen was a Staufer reward to a loyalist, since they were the representative of the duke in the role of the count Palatine (the Staufer being duke of Swabia. Finally the duchy of Teck really corresponds to the Zähringer sphere of influence, not a truly territorial duchy (it's influence didn't last enough).
(*= the conventional modern spelling of Bayern in favour of Baiern is a 19th century convention, before that both were used, for instance in Dutch it is Beieren)