From Prodigy 1x17 Ghost in the Machine (go to 06:15):

Gwyn: "If we're all stuck in one room, how is Zero all the way over there?"

Rok-Tahk: "Motion floor tracking, visual horizon manipulation. The Holodeck tricks the mind to create any scenario!"

Could have sworn there was a visual in the episode as well, but I can't find it.

I seem to remember the official explanation being that they’re not that far apart, but that the holodeck can use perspective tricks to seamlessly make them seem that far apart. You could run away from someone in one direction and never hit the wall while things shrink and enlarge to make you seem far away from your companions.

It's admittedly a very low tech explanation but if all the suites are next to each other, perhaps they just have removable dividing walls to allow for different size requirements?

Maybe Quark has one big one that he charges extra for, except Sisko gets to use it for free since Starfleet doesn't charge him rent.

The magic of suspension of disbelief

It definitely breaks the explanations that we've gotten in-world for how the holosuites work. There's even comments in other DS9 episodes about the walls being closer than they appear (Garak in Afterimage comes to mind). We never see a large holosuit inactive to get a sense of the walls, but the Vic Fontaine episodes also break this space with lots of people being fairly spread out.

I’m sure O’Brien could figure out a way to adapt a cargo bay to be used as a holosuite. That plus some other creative engineering solutions, I’m sure!