The minimal component size required is related either to the rated dissipation power or to its value, and the procedure in the design of an electronic board is to use the smaller component whose value meets the range of values allowable for the circuit specifications.
In general, the smaller size is the cheaper and doing that, the board size will also reduce. However, undersized components bellow 0805 turn difficult to assemble it by hand, which is a problem during the prototyping phase.