The following applies to high resolution speakers rather than midfi gear:
Setting the center channel to "large" is better sounding regardless of how small your center speaker is because when you set your receiver/processor to "small", the receiver inserts a high-pass filter, usually steep-slope and not of the greatest quality, to remove the deep bass and protect your center channel. Having this filter in the signal path to your center will degrade sound quality noticeably if you have a very high quality center loudspeaker and equally capable electronics. Less revealing speakers and systems will not be as sensitive to the insertion of this filter because of the qualitative limitations of the speaker's own crossover along with the limited transparency of the electronics.
Setting the center channel to "large" is better sounding regardless of how small your center speaker is because when you set your receiver/processor to "small", the receiver inserts a high-pass filter, usually steep-slope and not of the greatest quality, to remove the deep bass and protect your center channel. Having this filter in the signal path to your center will degrade sound quality noticeably if you have a very high quality center loudspeaker and equally capable electronics. Less revealing speakers and systems will not be as sensitive to the insertion of this filter because of the qualitative limitations of the speaker's own crossover along with the limited transparency of the electronics.