The boundaries of California are a result of the Compromise of 1850. California had originally been a part of the very large federal territory known as the "Mexican Cession", the former territory controlled by Mexico that the U.S. acquired through the Mexican-American War and the resulting Treaty of Guadalupe Hidalgo of 1848.
Even before the war had ended, white Americans began pouring into what's now California during the Gold Rush. By 1849, the western part of the Mexican Cession (California) had more than 60,000 white inhabitants, which Congress had used as the de facto benchmark for admission as a state since that number had been used in the Northwest Ordinance in 1787 (someone correct me if I'm wrong - there may have been an actual law that used this number, but I am not sure).
In any case, in 1849, there was a call for a constitutional convention in California to draw up a state constitution and apply for statehood. This constitution outlawed slavery. Article I ("Declaration of Rights") Section 1:
"All men are by nature free and independent, and have certain inalienable rights, among which are those of enjoying and defending life and liberty, acquiring, possessing, and protecting property: and pursuing and obtaining safety and happiness."
And Article I Section 18:
"Neither slavery, nor involuntary servitude, unless for the punishment of crimes, shall ever be tolerated in this State."
The petition for statehood was then sent to U.S, Congress who debated the matter. There were partisans all over the map. A Northern "Free Soil" Democrat from Pennsylvania, David Wilmot, proposed a law that came to be known as the Wilmot Proviso. It stated that none of the territory of the Mexican Cession should have legalized slavery.
Southerners objected vociferously. Instead, a proposal was advanced that would extend the Missouri Compromise line all the way to the Pacific Ocean. In effect, this would mean that the area that is now most of New Mexico, Arizona, and Southern California would all be slave states, while all the rest would be free states.
Some Southerners thought that even this wasn't enough, and wanted some kind of one-for-one trade, where one slave state would be entered into the United States for every free state.
This issue would remain contentious until the Civil War. In fact, Abraham Lincoln's main platform plankl during his 1860 run for the presidency was essentially a modification of the Wilmot Proviso - none of the federal territory in the West that was not yet a state should have legalized slavery, part of the Mexican Cession or not.
The compromise that was reached was that California was admitted as a free state—but as one, very large free state. So, in effect, the advantage that free staters would gain in the Senate was limited. And further, in exchange, the pro-slavery Southerners got a more powerful Fugitive Slave Act, which made it much more difficult for Northern states to give rights of jury trials and other rights to their black citizens, taking "fugitive slave" cases out of state courts and putting them into federal courts. (With the subsequent Dred Scott v. Sandford decision, Black Americans had no virtually no federal rights at all, where the Supreme Court decided that Black Americans were not U.S. citizens, whether they were free or enslaved, living in the North or South.)
Anyway, in January 1850, the first attempt at the Compromise of 1850 was undertaken, with the Clay Resolutions, proposed by Henry Clay. The pertinent resolution stated:
"Resolved, That California, with suitable boundaries, ought, upon her application to be admitted as one of the States of this Union, without the imposition by Congress of any restriction in respect to the exclusion or introduction of slavery within those boundaries."
Southern Congressmen successfully objected and it did not pass. Later in the year, the Compromise was tried again, with re-worded resolutions split up one by one, under a proposal negotiated by Stephen Douglas. The "Act For The Admission Of The State Of California Into The Union", began:
"Preamble. Whereas the people of California have presented a constitution and asked admission into the Union, which constitution was submitted to Congress by the president of the United States, by message dated February thirteenth, eighteen hundred and fifty, and which, on due examination, is found to be republican in its form of government:
"Section 1. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, that the state of California shall be one, and is hereby declared to be one, of the United States of America, and admitted into the Union on an equal footing with the original states in all respects whatever."
"...Section 3. And be it further enacted...that all the navigable waters within the said state shall be common highways, and forever free, as well to the inhabitants of said state..."
So, it essentially said the same thing that the Clay Resolutions had said. It recognized that the anti-slavery state constitution of California was valid, and that the state would be admitted to the Union under that constitution, and, further, that its waterways would also be recognized as free, where slavery would not be allowed.
So, its large land mass is a result of compromise with pro-slavery politicians, that it would be admitted as a free state, but as one, large free state, to limit its influence in the Senate.
For similar reasons, Texas was admitted as one large slave state a few years earlier. Incidentally, during unsuccessful negotiations in 1860-61 to prevent the outbreak of the Civil War, one of the compromises proposed was that all the remaining Western territory that had not yet become states, be organized into two enormous states, with the boundary following the Missouri Compromise line. All the land South of the line would be admitted as one large slave state. All the land North of the line would be admitted as one large free state. Obviously, it didn't happen, but the effort was always to maintain parity (or close to it) between free states and slave states in the Senate. This was an attempt to appease the pro-slavery South so that they would not revolt. Obviously, this didn't work, since there was not enough support on either side. The South wanted more, and the North, who had the votes and the popular will on their side, was not willing to give even that much to them.
For a little bit more information, the Office of the Historian of the U.S. House of Representatives has a brief article on the circumstances of California's admission to the Union and how it related to the Compromise of 1850.
There are several books dedicated to the Compromise of 1850 as well, including A Strife of Tongues: The Compromise of 1850 and the Ideological Foundations of the American Civil War by Stephen E. Maizlish, and Prologue to Conflict: The Crisis and Compromise of 1850 by Holman Hamilton.