Ironhorseman,
I have to "side" with Michael on yard size. By your logic,"A good yard usually has 1 classification track for each major destination. The destination can be another town, a large industry, or the "next yard". So If a layout has 6 towns (switching areas) the max a yard would need is 6 classification tracks.", on my layout, if I were to have a classification track for each major town, I would need a yard that was 12 tracks wide. Adding in the separate major industries that aren't a part of these towns, I would need 5 additional tracks. Instead, I have a yard that is only 7 tracks wide. I wish I could make it bigger.
In this yard, I setup trains such as 4 turns, 5 locals, 5 trains to staging, 4 mine runs, 4 passenger trains. Receiving train wise, 4 turns, 5 staging, 4 mine trains, 4 passenger, and 2 interchange trains. While this may seem like a lot, spread out over the timetable, its not. I haven't even considered adding thru trains yet.
The "small" layout should only have a small yard, simply because you don't want to get the layout overwhelmed by the yard, but if you don't have a area big enough to be able to sort the cars to other destinations, operations on the layout can become stale very soon. I also doubt that many modelers have the will to restrict themselves to a small number or types of cars and locomotives.
Prototype railroads built large yards for a reason, and that reason was to make sure that cars got sorted into the correct trains, for destinations that extend beyond the next town, or industry. While a shortline or branchline rr may be able to get by with a siding, or just 2-3 tracks in the yard, when you get to mainline, interchange and branchline trains coming into a yard, and going out of that yard, the bigger the yard, the better.