It will depend on the fill Stitch and the amount of pull. If you have Satin, you want to keep the Stitch length at about 5MM Max. Really big fill Stitch objects might distort because of the pull. Open stitching such as pattern fills can go bigger. As far as reducing the size goes, you may run into problems with underlay and spacing.
If you break apart a letter to an embroidery object, do you still have to stay within the recommended size guidelines?
It will depend on the fill Stitch and the amount of pull. If you have Satin, you want to keep the Stitch length at about 5MM Max. Really big fill Stitch objects might distort because of the pull. Open stitching such as pattern fills can go bigger. As far as reducing the size goes, you may run into problems with underlay and spacing.