Is SegWit a block size increase?

Yes! Segregated witness replaces the block size limit with a new block weight limit, counting each byte of witness data as 1 unit of weight and UTXO transaction data as 4 units; as a result, the maximum size of a block becomes just under 4 MB.

However, blocks are not expected to consist entirely of witness data, so blocks near 4 MB in size would be unlikely.

According to some calculations performed by Anthony Towns, a block filled with standard single-signature P2PKH transactions would be about 1.6 MB and a block filled with 2-of-2 multisignature transactions would be about 2.0 MB. As an example, here is one block mined on the Bitcoin testnet, which currently supports SegWit, containing 1.7MB of transactions.

Even as a coder, when I first heard those terms, I thought, OK so a new node that supports SegWit will download the old, traditional block, and then download the new “witness block” as well, and with both those things be able to verify everything.

First day I started coding (re-implementing SegWit in golang from the BIPs without looking at the c++ code) I realized, nope, that’s not how it works. The “witness block” has everything, including witnesses. The new software doesn’t touch non-witness blocks. The blocks are bigger. — Tadge Dryja, MIT DCI

It is further likely that future scaling improvements, such as the Lightning Network and increased used of CoinJoin and other multi-sig constructions will improve the ratio such that filled blocks become larger than 2 MB.