Shouldn't file size reduce?

With regard to compression, resolution in video doesn't work the same as it does with a photo. The most important number is your bit rate, the number that's measure in Mbps or Kbps. That's megabits or kilobits per second (bits are a measure of data transfer and bytes, as in Megabytes (MB), are a measure of file size). Thinking about it this way, it now makes sense that the file could be 500x500 pixels or 10,000 x 10,000 pixels and still have a similar file size—it's all about how much data you're packing in to each second.

Lower resolution files don't look as bad with lower bit rates as higher resolution files are, so you can change your bit rate from what I'm assuming is "10" to something like 8, 5, or even lower. Your total file data rate is being read as 11.3 Mbps because audio is also being accounted for.

There's no magic number, and it's all about the content of your video. Do you have fast moving action? If so, then you'll want more data per second. The same thing goes for something like a shot of a tree with thousands of leaves. The tree may be barely swaying in the wind, but there's tons of tiny movement, so again, you'll want more data per second. On the other hand, if you have a largely static shot where most of the frame isn't changing (say, a city street where all cars are parked and maybe only one drives by) then you can get by with a much lower data rate because the video compression will actually be able to reference other parts of nearby frames that didn't change and use those to reconstruct new frames.

Video compression is a very complex topic, but a very interesting one. I don't know how long your video is, but I will say that 85 MB is very small for a video. So it's all relative.