Why is my pg_xlog directory so huge?

After installing my new server I just discovered something that doesn't seem right:

sudo du -h /var/lib/postgresql/9.2/main

4.0K	/var/lib/postgresql/9.2/main/pg_snapshots
4.0K	/var/lib/postgresql/9.2/main/pg_serial
4.0K	/var/lib/postgresql/9.2/main/pg_tblspc
29M	/var/lib/postgresql/9.2/main/pg_clog
6.8G	/var/lib/postgresql/9.2/main/pg_log
104K	/var/lib/postgresql/9.2/main/pg_stat_tmp
81G	/var/lib/postgresql/9.2/main/base/27132
6.1M	/var/lib/postgresql/9.2/main/base/12040
4.0K	/var/lib/postgresql/9.2/main/base/pgsql_tmp
6.0M	/var/lib/postgresql/9.2/main/base/12035
6.0M	/var/lib/postgresql/9.2/main/base/1
81G	/var/lib/postgresql/9.2/main/base
80K	/var/lib/postgresql/9.2/main/pg_multixact/members
108K	/var/lib/postgresql/9.2/main/pg_multixact/offsets
192K	/var/lib/postgresql/9.2/main/pg_multixact
12K	/var/lib/postgresql/9.2/main/pg_notify
4.0K	/var/lib/postgresql/9.2/main/pg_twophase
160K	/var/lib/postgresql/9.2/main/pg_subtrans
752K	/var/lib/postgresql/9.2/main/pg_xlog/archive_status
202G	/var/lib/postgresql/9.2/main/pg_xlog
496K	/var/lib/postgresql/9.2/main/global
289G	/var/lib/postgresql/9.2/main

As you can see the pg_xlog folder is 202G, which is more than my entire database - this seems wrong to me, however I have no clue why this would happen.

In short, this is my postgresql.conf

data_directory = '/var/lib/postgresql/9.2/main'         # use data in another directory
hba_file = '/etc/postgresql/9.2/main/pg_hba.conf'       # host-based authentication file
ident_file = '/etc/postgresql/9.2/main/pg_ident.conf'   # ident configuration file
external_pid_file = '/var/run/postgresql/9.2-main.pid'          # write an extra PID file
listen_addresses = '192.168.0.4, localhost'                  # what IP address(es) to listen on;
port = 5432                             # (change requires restart)
max_connections = 300                   # (change requires restart)
unix_socket_directory = '/var/run/postgresql'           # (change requires restart)
wal_level = hot_standby                 # minimal, archive, or hot_standby
synchronous_commit = on                # synchronization level; on, off, or local
checkpoint_segments = 100               # in logfile segments, min 1, 16MB each
checkpoint_timeout = 10min             # range 30s-1h
checkpoint_completion_target = 0.9     # checkpoint target duration, 0.0 - 1.0
archive_mode = on               # allows archiving to be done
archive_command = 'rsync -a %p postgres@192.168.0.2:/var/lib/postgresql/9.2/wals/%f