[RM2K3] FULL GAME OR EPISODES?

I don't think it's necessarily lazy, at all. You should do whatever is more personally manageable precisely so you lower the chance of burning out and losing interest in continuing the project.

I have been planning smaller and smaller games to the point where now I would like to make really small instalments - separate games, not just episodes of one game - in the same universe so that they all tell part of a larger story, but are self-contained and have their own story and character arcs.

Many of the seasoned devs here will likely tell you to make tiny games first to learn the basics (if you're an absolute beginner). A lot of seasoned developers may also make episodic games anyhow, so really it's just about what suits you for how you work on, and execute, a game.

I think episodic is a very viable way for indie developers to release content. And I'm with suzy: it's not lazy. If it keeps your motivation high, then it's probably your best option.

hedge1: In my experience the problem is that it does the exact opposite. Once you release an episode, one of two things happens (sometimes both):
1) The euphorea of having finished and released a game hits you, and you are filled with contentment. Your motivation and drive to continue production disappears, because you no longer have that hole in your soul where a completed game should be.
2) The first episode fails miserably, and you realize that it would be better to do something else than try to build off of a failure.

If you're a highly experienced developer on your fifteenth game, then the first problem becomes much less of a big deal. At that point your reasons and motivations for making your game are very different than a new developer's are. But it's a huge problem for new developers, who are not accustomed to the wonderful feelings that accompany release. (In fact, even just posting blogs about stuff you've finished making in your game while it's still in progress can trigger these feelings of success and completion, and kill your motivation!)

I think, if you're worried about burnout from a long, drawn-out development, you should instead make games that don't require a long, drawn-out development. Lots and lots and LOTS of players prefer games that are only a couple hours long. You can make a game like that in just a few months. Basically, you have the right idea with breaking the work down, but you shouldn't make it so that your games feel incomplete when they're released. Make each one a separate unrelated story, or at least make each one stand completely on its own, instead of ending with "sequel bait."