Hello! It's probably not a good idea to base your own planning off of something you see in a photo. Images are easily misinterpreted and what this homeowner found to be ample space in a tight urban row house may feel confining you you in another context.

Does the headboard have to be that big?

Hello! Of course there are no rules about these things, really. What you are perceiving here as a headboard is also the wall between the bedroom and the bathroom. So in that sense, yes, it needs to be big enough to do its job.