General Principles
It's generally a "sensible and reasonable" kind of judgement question, not an absolute one.
The considerations include:
- Are the parts large enough for their power/voltage requirements?
- Which are the cheapest?
- Sometimes the larger ones are more reliable
- They will have different thermal properties
- If you're making it by hand, you don't want them too small
- If you anticipate that you might need modifications, bigger is a lot easier
- Your assembly company will have limits
- Your assembly company might give you the most common passives for free (because they're already on the machine)
- How small are your voltmeter/oscilloscope probes?
- Are the parts large enough for component values to be printed on them?
- If the board suffers vibration or handling, it may be more robust if the parts are larger
- Durage a parts shortage, some sizes may be more likely to remain available
- Capacitors and inductors have a lot of other performance variables beyond capacitance and inductance (ESR and current rating being just two) and appropriate ones may only be available in certain sizes
In practice, designers typically have a palette of parts and sizes they have good experience with, and they tend to stick to those. Even if a production circuit might have a free choice of components, development and prototype boards might want to use components the designer has in stock.
Some PCB assembly companies offer ranges of standard parts for free, on the grounds that the parts themselves are cheaper than the time to put in reels of components. Checking a large UK assembly company, the resistors and capacitors were in the range 0201, 0402, 0603, 0805, 1206; ferrites in 0805, a few transistors and diodes in SOT-23.
Survey
I took a survey at a major US distributor for its selection of 10 K SMD resistors with 1% tolerance, to see what sizes it expects to sell.
It had a total of approx 80 million parts in stock and about 400 product lines, with 97% in the range 50 mW to 250 mW; the most common were 100 mW (30m parts, 80 varieties) The highest level of stock was for the size 0603 (all sizes here are inches), with about 30% of 10K 1% SMD in this size, and ~90 different product lines. The highest stocked individual part numbers were 0603 (100 mW) with 12 million in stock, 0805 (125 mW, 7.7m), 0402 (62.5 mW, 6.4m). 0201 and 1206 were about 3m each, at 50 and 250 mW respectively. 0201 was 200 ppm/deg C, all the other 100. All of these were the same price, about USD 4 per 1000.
Thus, after checking whether you have any special requirements for power or anything else, most designers appear to plump for 0603. My inference (from stock levels vs number of product lines) is that we're seeing a shift away from 0805 and an increase in 0402. The high level of choice and low stock levels for the larger sizes (1210 and up) suggests they have niche and or obsolete purposes.
![enter image description here](https://cdn.statically.io/img/i.sstatic.net/scayx.png)