Interesting, I guess that's the same reason why the sequel deviates drastically from the story. Wonder if Dragon Ball 3 does the same thing, but at least it looks like a complete redo of the first two games.
Dragonball 2 is an oddity, using the Piccolo arc as a backdrop for a mostly-original adventure where Goku travels around the world, visiting most of the important locations from the series, interacting with most of the important characters and fighting most of the older villains. Presumably they wanted a focused quest.
Dragonball 3 sort of debuts the formula that would later be used for the four Dragonball Z NES RPGs, where instead of one big world map with tons of locations you have a lot of smaller maps with a couple things to do on each, and you get sent to the next map once you've complete the objectives on the current one and forwarded the story. Unlike the later games, though, DB3's smaller maps are mostly just variations on each other, with new passages to new areas opening and old passages closing every time you move to a "new" map.
Plotwise it starts at the very beginning of the series, with the meeting between Goku and Bulma, and continues all the way to the final battle between Goku and the reborn Piccolo.