It's not a question of number, its a question of the proportion of economic activity that happens via full nodes that the user controls. Read this: https://en.bitcoin.it/wiki/Full_node#Economic_strength

Understood. This also strengthens the point that only small businesses and above need to be able to run a full node.

Another reason that small blocks are important is latency issues creating centralization pressures for mining. See this and thismathematical

This was a really interesting read. To sum it up, slower propagation times favor bigger miner and increase their rewards. Withholding attacks are not an issue because of obvious reasons.

The question is. When do slow propagation times become an issue? I think, only when they actually start putting mining farms out of business. Are we ever going to reach a point when this could be an issue? Besides that they do increase the threshold for new mining businesses and encourage more investments into existing farms to keep up with the big ones.