At liftoff the rocket is at its heaviest, as no fuel has yet been burnt. To overcome this large mass, the rocket thrusters must generate an enormous amount of thrust early on. Later, however, they must still generate a high specific impulse (Isp) in vacuum. An impulse is the integral of force over time; it acts to increase the momentum of an object. To maximize specific impulse, the ratio of the nozzle exit area to that of the nozzle throat (nozzle area ratio) must be as large as possible. Ideally, the combustion gases exit at ambient pressure. This is impossible in vacuum (or near vacuum), rather, nozzle area ratio is maximized. However, a large nozzle area ratio will not expel exhaust gases at atmospheric pressure.
This creates a problem at sea level, however. Large nozzle area ratios reduce engine efficiency at sea level. This reduction in efficiency occurs because the gas in the outermost areas around the nozzle expands to the point that its pressure is lower than atmospheric pressure, which generates negative thrust. When the nozzle area ratio reaches very large values, the exhaust gas flow separates from the nozzle and can cause damage.
Image: Wikimedia Commons - Jupiter S3 Rocket Engine
Note the large nozzle area ratio.