The potential reach you need depends on the product/service you are advertising and how niche it is. The more niche your product/service, the smaller the audience size should be. In general, you want to be looking at the performance (e.g., ROAS) of your audiences and then select similar ones of a similar size to test with. However, if you are launching specific offers (e.g., an offer throughout the month of people with birthdays in November), you may decide to widen your audience reach to maximize the potential of your ads.