Manager Bashiok at Battle.net Forums had this to share about Diablo 3's game world. Apparently, outdoor game world areas will not be randomly generated like Diablo 2. But instead, Dungeon Areas will be.

They're for the most part static. With the outdoor environments we felt we could get a lot more out of them by crafting large and visually impressive scenes, which random map generation really just doesn't allow for all that well. By that same token one of the main goals with Diablo III is to flesh out Sanctuary, to make it feel more like you're in this living and breathing world. With towns shifting around everywhere you do sort of lose a sense of cohesion, and an attachment to the places you're visiting.

On a very slight technical note - for random map generation you're essentially creating a bunch of rooms that can all fit together in various ways. It works quite well for a dungeon which is essentially a series of rooms any way. For an outdoor environment though it tends to make it either fairly bland, or fairly linear just by how the edges have to line up. You're either running zig-zag patterns to find the map edges, or you're running down a narrow pathway. Neither are extremely compelling, and at the same time you're losing the visual grandness that could come from a fully hand-crafted and artistically realized environment.

That said, the outdoor areas aren't completely static.