Everything is too big in 1600x1200

[Chris G]

I just did a clean install of xubuntu instead of my original ubuntu
with xfce added on as an afterthought.

It went more smoothly than my original ubuntu 8.10 installation,
probably because a few of the rough edges have now been smoothed out.

However I have a problem, I've set the resolution to 1600x1200 (my
monitor's native resolution) and everything is much too big.  Default
fonts are huge and even 8 point is rather large.  What's causing this
and how do I fix it?  Is it something to do with DPI and, if so, how
do I fix that?

-- 
Chris Green