Let me see if I can answer some of your questions. First of all, 4k textures are usually bigger than 1.7 mb. As an example, I’ve just created a jpg with a resolution of 4096 x 4096, 96 ppi, solid white, and it weighs 1,07 mb. Adding some colour already bumped that size to 3,36, and it was a very basic set of strokes. After that, I’ve added a forest texture and that increased the size to 9 mb, and it wasn’t a fully used 4k canvas.
With that in mind, I don’t find it strange that your texture is showing as 11 mb big. The strange part would be it actually showing as just 1,70 mb on your drive. Can you perhaps specify a bit more what that texture looks like? I’m assuming that your texture is light on your drive because of the format that you’ve saved it as, but it might not be representative of the actual “real” size.
Apart from that, there are ways which you can use to reduce the size of the texture you are using. First of all, a 4k texture as a diffuse or roughness seems pretty high for a game - or even archviz -, as the standard 1080P display can only display 1920 x 1080 pixels. Even if you go to “4k” screens, the output is only 3840 x 2160, which is less than a 4k texture (4096 x 4096 pixels). What I’m trying to say is that you can go lower quality without sacrificing any visual fidelity.
If you still feel like you need the 4k resolution because you are painting textures over big areas, you might be better off by subdividing those areas either through using smaller objects or by masking parts of the original one, so you use more textures but smaller in size rather than a big one. Apart from that, keep in mind other methods for texturing your mesh, like procedural material creation, using noise to mask areas or even creating your own masks. These methods are usually the way to go before using large 4k textures.
If you stil need 4k textures regardless of the above, you might consider lowering the quality of your images through Photoshop or GIMP.
As for how the mip work, you can find more info in here: https://docs.unrealengine.com/latest/INT/Engine/Content/Types/Textures/Properties/
That website has lots of info on many of the things you’ve asked, so I hope it helps!
Hoping you find this useful, let me know if I can help you with anything else