To answer your two separate qs (to the best of my Knowledge):
Q: Why excessivley large swords?
A: this has been well explained by several ppl on this forum. Cuz it looks awesome to swing around a sword twice you height, especially if u can do it without looking clumsy AND instead look dexterous and stylish.
Q: why swords at all?
A: OK so here Cloud is not only the most known example, he is also the perfect example. Why is your first battle in FVII controlling one guy with a sword (ridiculously large one, but still) against several soldiers armed with submachine guns? He's gonna die right? Now gameplay mechanics aside (i hit u, u hit me, i hit harder, u die faster, i win!), in most Animes / JRPGS its sort of a given that no matter their background, a sword wielding character is ALWAYS superhumanly fast and strong.
Since this aspect is given to main characters, minor character, protagonist and antagonists, it is important for the protagonists to be able defend themselves against antagonists with superhuman abilities. If your enemy can move from the other side of the battlefield faster than you could get of more than one shot (forget having time to aim), then you are better off using the time it took you to draw your gun to instead draw a sword and prepare to block the attack. Guns are useless in close combat, especially larger ones (rifles etc.), so these character need some melee weapons to counter their superhuman adversaries. Ammo is also an issue, if you cant shoot your enemies before they get too close, there is no way you can hope to stay alive while trying to reload.
On the offensive side, a superhumanly fast character is wasting his potential if he has to take cover and slowly pick off his enemies from afar with a gun like a common grunt. If you can move faster than your enemies can aim, you should be constantly on the move and cutting the down one by one until they are all eliminated (as seen in many Animes JRPGs).
Mind you this explanation is something ive come up with to try to make sense if this stuff myself, it isnt really logical that a guy with limited armour and a sword twice his size can take on fifty guys in full combat gear and assault rifles and come out relatively unscathed. But if u apply "well if you just accept THIS part as the fantasy bit, then THAT can be explained through reason and logic" argument that i enjoy using for Fantasy / SciFi science and logic, then it sortof makes sense why they use swords instead of guns.