Again, this one is all about contrasts. A drawing that is full of all one kind of shape (meaning all big, all medium-sized or all small shapes) is much less interesting than a drawing that has a nice variety of sized shapes. A
contrast of different shapes creates visual
interest.
Remember that areas of detail draw the eye. What this means is that, if there is a part of your drawing that has a lot of
small shapes on it, people will tend to focus on that area of the drawing. I'm not sure why the human eye works that way. But you know what? This leads to an interesting result in drawing characters. The face is the part of the human body with the most small shapes clustered around in a group - meaning the eyes, nose and mouth. Which works out well because in real life people always look at the face first when encountering people. Why is this, you ask? Well...
When we look at people in real life, we look at their eyes and mouth before anything else. The eyes and mouth are the most expressive (and telling) part of the body. So we look at faces to see if people mean us harm or have good intentions towards us. If you see someone who looks angry or crazy we know immediately to be cautious and/or avoid that person. So we evolved to study faces as a survival mechanism (that's one theory anyway).
So what I'm trying to say is that many great drawings will have a lot of small shapes on the face - not just the features but stubble, detailed hair, lots of wrinkles, etc. So then the drawing plays into our natural tendency and we look at the face on the drawing first, especially if the areas around the face are free of detail and don't compete with the face.
Another weird thing that nature has done that helps us: there are a lot of small areas of detail on the hands and feet, which, after the face, are the most expressiive parts of the body. Hands have knuckles, wrinkles, little digits and fingernails - all small shapes that can serve as detail and help draw the eye to a naturally expressive part of your drawing. Feet have the same things. In general the other parts of the body are made up of large and medium shapes that don't draw the eye so much.
Of course clothing and jewelry can have small details that draw the eye. So be careful as you design those elements that they are doing what you want them to do. Don't put a really detailed bracelet on your character unless you want the audience to focus on that. It might detract from the face or other important parts of the character or scene.
The same things that make a good composition or layout are the same things that make a good character design or good character drawing. After all, good design is good design. In general, a good drawing usually has: large empty spaces for the eye to rest, balanced with areas of small spaces to draw the eye. Medium sized shapes fill in the inbetween spaces.
How perfect is this drawing? Small shapes on the face to draw the eye, little ears with little hairs as well. Nice big belly, with little rivets on it. Medium sized stripes on the pants so that the pants don't become big shapes as well. Little wrinkles and toes on the feet to balance out the body and it's far enough away from the face to not compete with it. And nice little bits of texture on the arm to balance out the other areas of small shapes but not too much. Click to see bigger.

Obviously there's a lot more good stuff going on here but we'll talk about that another time. One topic at a time.
Small Med and Large can bring order to something that is unweildy or difficult to organize as a drawing - like clouds or waves or bubbles, or hair, like the mane of a horse.
An unweildy "non-shape"

More rhythm and design sense by dividing the mane into a small section, a medium section and a large section (just a quck doodle and not overly impressive but I don't feel like doing a better one, and anyway you can begin to see the possibilities).

I was never an effects animator but my impression is that they use this concept a lot. To even approach animating something like waves or lava I would think you would first design the frame to break that unweildy mass into S, M and L shapes. It creates order out of chaos and can lead to a pleasing composition if done right.
Ronald Searle creates interest by good variety of small medium and large.

A nice variety of small, med and large shapes is essential to any successful character lineup. All the characters must be harmonious and work together so that all of the characters seem to come from the same world. And all of their shapes need to work with every other character so that, no matter which ones are in a scene together, they will compliment each other and not duplicate one another. Ken Anderson's "Robin Hood" lineup from "The Art of Walt Disney" book.

"Trees and Roman Ruins" by Claude. Nice balance of small leaf shapes, balanced by large section of empty sky to let the eye rest. Imagine how the effect would be ruined if the sky were full of medium or small clouds. Nice medium shapes below in the landscape.

It's worth pointing out that for layout composition, you will usually put all of your small shapes in the area of the foreground, because obviously we see lots of detail in things that are close to us. Atmospheric perspective (you know, smoke, dust, moisture in the air) blurs out detail on things that are far away from us. So we will see texture on a leaf that is right in fron of us but a tree a mile away is just an overall shape with no detail.
No duh, right?
Contrast and variety are going to be a recurring theme as we continue to talk about good design. Obviously using three different sizes of shapes will make any design better.
For more examples of good small, med and large take another look at the Milt Kahl stuff I scanned before (check out the June Archives button on the right).