On Xbox Live (marketplace.xbox.com/Product/Worms-Ultimate-Mayhem/66acd000-77fe-1000-9115-d80258410afd?nosplash=1#LiveZone) "Worms Ultimate Mayhem" has this file size: 831,56 MB.
On Steam (http://store.steampowered.com/app/70600/) "Worms Ultimate Mayhem" has this file size: 1.8 GB.

Why is there such a big difference? Are there any contents missing in the Xbox Live Arcade version?

There is generally some content missing from a title which calls itself the best of 3D and Mayhem.

compressed so you can dl faster i guess

Xbox Live titles have size limitations, so they might've had to cut some stuff to fit.

They more likely just used lower resolution textures and lower quality audio samples/music/videos resulting in the steep file size drop.

Xbox Live titles have size limitations, so they might've had to cut some stuff to fit.

While it is true that there is a size limitation, it's way bigger then 800mb
Section 8 prejudice is up to 1.78gb

Yes, actually the file size limitation is 2 GB. So Team17 wouldn't have had to degrade anything.