Does this refer to a specific Country or area? It sounds like an idomatic reference to somewhere specific but it's not a reference I recognise.
Nope at least not to my knowledge, it's just an country that's big.
Yes it could refer to somewhere like Australia but be aware that this sentence is wrong in two ways and has been deleted while still lingering on to confuse users of the course.
The country should be Y Wlad and not 'yr wlad'
I live in a big country would be a more usual sentence both in English and in Welsh Dw i'n byw mewn gwlad fawr